I had the pleasure of interviewing Maynard Webb, an investor in startups through the Webb Investment Network, which he founded. He is a cofounder and board member of Everwise, a mentorship startup, and a board member of Visa and Salesforce. Previously, he served as Chairman of the Board of Yahoo!, CEO of LiveOps, and COO of eBay.
Jean: Thank you so much for joining us! Can you share your story about how you got into the VC space?
I started doing angel investing in 1997. I was the CIO of Bay Networks and two colleagues (Monty Kersten, who was head of legal and is now retired, and Jim Goetz, who is now of Sequoia Capital) left to start Vital Signs and they asked me to invest and chair their advisory board. It worked out well — I enjoyed the opportunity to help, the company was successful, and we had a lot of fun. My next big investment was Niku, where I took my first external board seat. The company went public. I caught the bug!
Jean: What kinds of startups do you typically work with?
We invest generally in seed rounds and will do selective follow-on rounds. We look for companies in spaces we know and that we believe have great potential (e.g. cloud computing, enterprise software, security, infrastructure products, marketplaces). Of course, the founder matters the most.
Jean: What do you look for in the management team of your investment companies?
We invest at the seed stage, so there’s a very small team at that point, often 2–5 people. In founders, we are looking for people we can believe in, who have been demonstrating their entrepreneurial skills for some time. We also want individuals who will have the grit to deal with all the body blows that come with running your company.
Jean: Can you share a story of a successful Angel or VC investment? What were some of the highlights?
At Webb Investment Network, we have been blessed with several breakout investments. One great example is Okta, where we were one of the earliest angels and part of several follow-on rounds. I was honored to be invited to and attend their IPO. Another is Zuora, which we joined a little later, who also had an IPO. Applovin has been an amazing ride. The founder never raised any institutional money and still had a billion+ exit.
At WIN, we love helping the companies in our portfolio and we’ve built solid enough relationships with the founders of these three companies that they are now helping other portfolio companies as WIN affiliates. It’s amazing.
Jean: What is one piece of advice you would give a startup?
Don’t be a tweener. We all know the breakout stories — those A+ ideas that took off from the beginning, like Google, Salesforce, or eBay. Yet, the reality is that these companies are very rare. Most companies fall in a middle space — there’s some traction, but the flywheel isn’t spinning and you’re not sure if the idea will scale. This uncomfortable middle place is what I call a “tweener,” and it’s a dangerous place to be. The CEO of a tweener company needs to act with an incredible sense of urgency:
- Put strong plans in place to get back on track to become a breakout.
- Take a deep look at the current state of things and future projections with the board and management team to assess how viable the strategy is and how bright the future looks. If some aspect of the business is working, consider betting the farm there.
- Take significant actions (e.g. painful layoffs, redo of product, pivot, etc.) to ensure there’s the cash needed to achieve the turnaround.
Jean: Do you have a favorite book that made a deep impact on your life? Can you share a story?
When I was younger, I used what I learned from Stephen Covey’s 7 Habits of Highly Effective People. I often used his framing (the four quadrants: urgent, non-urgent, important, non-important) to help my team set priorities and also how to identify Quadrant 2 and focus on what is important. Later, it inspired a framework I created for my first book, Rebooting Work, designed to help people become the CEOs of their own destiny and achieve their career dreams.
Jean: What are your “5 Things I Wish Founders Knew Before They Pitched To Me” and why. Please share a story or example for each.
Do your homework. It’s best to come in prepared with some knowledge about what motivates us and what makes our model different. Our network is clear about what it invests in; please only approach us with what really may be a fit. Tell us about how you have uncovered a massive opportunity in a space we care about. I love when someone has referenced us with founders or affiliates so they have taken that step and are already interested in partnering for more than just money.
Be open to learning. We are looking for people who want help — not just financially but who want to learn from our expertise and who welcome us as a coach or guide. Building a great company is as important as the return we get. If a founder is more interested in dollars than help we don’t have a match.
We need to hear a clear and passionate “why you/why now/why this.” We want to hear why you and your team decided to go after this particular market opportunity. What makes you uniquely qualified to execute your unique approach? Numbers around the market size and market opportunity are important, but we can do this research on our own. We want to see your desire to fix something and to make an impact. Tell us why your product does not exist yet, who tried to do this before, why they failed, and what are you doing differently.
Tell us your backstory. We are investing in a person as well as an idea and a space. We want to hear a great back story. Tell us about how you started doing odd jobs and developed it into a neighborhood business when you were was 11, opened your first E*TRADE account at 14, and are doing this now because you are massively frustrated with what was out there. We want to see your passion, energy and expertise.
Be prepared to show us how you deal with adversity. How equipped are you to handle years of grinding and pain? How confident are we, and you, in your ability to handle ups and downs? We love entrepreneurs with grit, who are willing to think big, work hard, and don’t see any other way of working.
Let me share one story that illustrates the points I mentioned previously. We once met with a founder who was creating a new marketplace. Instead of coming in and being passionate about his idea and the opportunity to get our help, they tried to grill us on what we knew about marketplaces and wanted us to prove ourselves. They told us they were only interested in investors who knew marketplaces. (They didn’t do any homework so didn’t know that I ran technology at eBay and had deep experience in marketplaces.) They didn’t have much accomplished — only a few friends signed on to the service — but they were acting like they had the best solution in the world. They weren’t open to learning and didn’t feel it was necessary to share what made them the best people to do this. When I asked the CEO what his biggest challenges were, he said, “None. I don’t see any until our revenue is north of $1B!”.
Building a startup is hard and we need to see how people deal with adversity. Do they have the intestinal fortitude to handle the ups and downs? I like to hear a story that shows they have the stamina as well as the understanding that this is not easy work. This founder did not show me that or anything that compelled me to want to work together.
Jean: Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this. 🙂
I’d love to reminisce with Don Shula, former Miami Dolphins coach, about the perfect season. I grew up in Florida and it was my senior year when they went 17 and 0. It was electric and they are still the only NFL team that ever went undefeated.
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Jean: This was really inspiring! Thank you so much for your time.
Originally published at medium.com