A VC in Vacationland

I see many different entrepreneurial types in my work.  Most are motivated by building a new, new thing, some are motivated by good works & deeds and some (more than you realize) by money.  It is that last class of individuals that bear a bit more scrutiny.  I can never quite tell up front if I am dealing with a totally money-motivated entrepreneur, but it is a factor I strongly consider in my evaluations.

Before you get hot and bothered about whether Dave is going all altruistic on you, forget it.  I am in venture capital to make money.  I love seeing those checks roll into the bank account from successful exits.  But that is about the only time I think about money in an investment, except up front when I am deciding how much to put into a company or idea.

But why am I concerned about whether an entrepreneur is primarily motivated by the potential monetary rewards from their labors?  A short story will help explain the issue.  I once had a junior partner working for me at Andersen Consulting. He was smart, good at selling jobs and a decent project manager.  Where he failed was in his love for money.  It made him do all sorts of things that he thought would advance his career to equity partner, like overselling potential benefits of projects to clients to seal the deal.  We were left with a number of unhappy clients and had to write off substantial fees to placate them.  He never seemed to get the relationship between his love for money and the problems it caused his customers and ultimately his career.  To put a fine point on his obsession with money, his license plate read THK 300K, which was the starting yearly cash draw before bonus for an Andersen Consulting equity partner at that time.  Needless to say, he never was promoted to equity partner.

There is a saying in the venture community, as well as many other that says: "Don’t worry about the money, but rather the results, and the money will follow".  That’s what I look for in an entrepreneur–someone who is worrying about results and not money. I ask a lot of questions up front about what motivates an entrepreneur and run the other way when many of those answers revolve around making a lot of money.  That motivation can create a lot of problems when it comes to running a company, including fraud and unhappy customers who have bought an exaggerated solution that does not delivery on its promises.