STRATEGY: The company needs to have a strategy. “Build it and they will come” has proven time and time again to fail. When looking at the strategy, we focus a lot of energy on go-to-market (GTM) as this is where most startups struggle. One of our entrepreneurs recently said, “I now have renewed respect for sales and marketing. I did not realize how difficult it is to get this right.” Money can be wasted on the wrong GTM. We advise our firms to focus on early customer acquisition to ensure that the market/customer is validating and guiding the plan.
As part of our series about “5 Things I Need To See Before Making A VC Investment”, I had the pleasure of interviewing Patricia Hume, Co-Founder & Managing Partner Wisdom LLP.
Patricia (or Pat) is a dynamic leader whose career in software and high tech spans four decades, including 20 years at C-level. With a wealth of cross-functional experience and deep operational expertise across large companies and microcaps, Patricia specializes in driving sustained growth and high-impact turnarounds. In addition to co-founding Wisdom LLP, she is CEO of Canvas GFX. She has held a long list of notable positions including Chief Revenue Officer at Convio (acquired by Blackbaud in May 2012), SVP Global Channels at SAP AG, Group VP of Avaya’s SMB Division, CEO of VerticalNet Markets (later acquired by Bravo Solutions for 15.2 million dollars) as well as numerous senior management positions during her 17 years of service with IBM. Her most recent position was Chief Operating Officer at iPass Inc. which was acquired by Pareteum in February 2019. Pat has CEO, CRO and CMO experience.
Thank you so much for joining us in this interview series! Before we dig in, our readers would like to get to know you a bit. Can you please share with us the “backstory” behind what brought you to this specific career path?
PAT: I spent 40 years in software and technology, working for both very large companies and small start-ups. Once you’ve seen both sides you realize that working for large businesses is relatively easy, as typically they are well capitalized and there is an abundance of talent to call upon to help get the job done. In small start-ups you have to fight a lot harder. Capital is difficult to obtain and the founder must be prepared to shoulder a heavy portion of the initial workload.
After a successful exit of a mid-size company where I worked as COO, I decided it was time to give back — not just as a mentor to start up founders but also as a venture capitalist. My co-founder, Gary Griffiths and I had developed some very strong opinions on approaches to venture capitalism and we wanted to do something different. We started Wisdom LLP in May 2019. Our philosophy while it might sound a bit similar to the many VCs in the market today, is indeed different.
Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
PAT: I love to read and do so often. Typically when I find an author I love I read everything that they have written. JM Coetzee is one of these and my favorite of his books is “The Age of Iron.” This is a poignant story, sad and lonely in many ways, of a South African woman who is dying of cancer. But it’s more than a story. It is also a passionate argument, in the form of lyric prose, that the greater the forces which try to divide us, the more possible — and certainly the more necessary — our unity becomes.
Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?
PAT: C.S. Lewis, the British author of “The Chronicles of Narnia” once said, “You can’t go back and change the beginning, but you can start where you are and change the ending.” This quote inspires hope, and brings courage through the knowledge that we can make a difference, no matter how large or small. It is about the empowerment of choice.
How do you define “Leadership”? Can you explain what you mean or give an example?
PAT: Effective leaders should be able to feel the pulse of the people they lead. I learned a long time ago that when people are treated with respect, when they are inspired, and when they understand that they have the power to make a contribution, no matter what role they play,great things can be accomplished.
At one point in my career I led a global team of extraordinary men and women.
When I stepped into the role, the business was a mess. Through endurance, commitment and the desire to achieve our goals, together we turned the business around and succeeded. Each member of the team knew their individual role and understood how it related to our shared goals. Crucially they also understood the importance of everybody else’s contribution. That helped to create a great sense of mutual respect and, when we had transformed that business, everyone on the team could honestly say, ”I played my part and made a difference.”
How have you used your success to bring goodness to the world?
PAT: I have recently joined CDL (Creative Destruction Lab) as a mentor. CDL is a nonprofit organization that provides early-stage founders guidance through an objectives-based program leveraging the skills and experience of a vast network of mentors, educators and scientists who guide and support the founder throughout the program. We focus on science and technology-based companies worldwide. This initiative has given me the opportunity to give back by sharing my experience with the entrepreneurs helping them think through the challenges of building their company and realizing their dreams.
Can you share a story with us about your most successful Angel or VC investment? What was its lesson?
PAT: We are a new venture capitalist firm and therefore we have not yet had any exits. That said, we are seeing very good progress with a few of our early investments. These companies have different strengths. Some have products with great market fit, solving real and current problems. Others have defined a great to to market model and are already delivering revenue. But the lesson you must never forget as a VC is that uncertainty is guaranteed. You can never really know how a company will turn out as there are internal and external forces that can impact a company’s success or failure.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
PAT: As a new venture capitalist firm we have not had any of our companies fail. That said, the pandemic did challenge one of our investments. This led to the founder deciding to pivot, which is showing some early success. The lesson learned here is twofold: 1) An investor cannot predict all events that could impact the success or failure of their portfolio, 2) There are always opportunities in change: the quicker a company can adjust to deal with change the more likely it will have a chance of success.
Can you share a story with us about a problem that one of your portfolio companies encountered and how you helped to correct the problem? We’d love to hear the details and what its lesson was.
PAT: We have a lot of founders who are great technologists but have not yet had the opportunity to become great business leaders. I am on the board of one of our companies which needed support to create and execute their go to market strategy and plan for operational readiness. The experience to guide founders as they create the building blocks needed to scale the business is really the core of the value we are able to provide to all of our portfolio companies.
In this instance the CEO was looking to hire a sales leader and was convinced that he had found the perfect candidate. I interviewed this person and quickly realized that they were a very strong subject matter expert regarding the industry but had no real sales experience. And while this may seem like a simple example it is important to note that as investors, we have an obligation to provide an objective voice. And the founders need to learn to rely on that voice for guidance and support to help them maximize their success.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
PAT: Our company is barely a year old and so that has not happened to us yet. But we are not given to focusing on regrets! The statistics inform us that the average time to exit is approximately six to ten years. We strive to diversify our portfolio to balance our success between early exit and potential failures. There is always going to be a company that you let go but as a VC you focus on those companies that you did invest in and not worry about those you missed. Second guessing your decisions is the worst thing you can do.
Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why. Please share a story or example for each.
- TEAM: We invest in people and we look for core teams that demonstrate the attributes we believe are necessary to succeed. These include intelligence, tenacity, passion, a desire to win, a willingness to listen and learn, and a level of humility. When we first meet a new potential investment, we spend a lot of time with the founders. Our portfolio companies are filled with a diverse group of men and women that live these traits, always willing to seek advice and take action.
- MARKET DYNAMICS: It is important that the team can articulate their market. The typical assessment includes the size of the market, the competition, technology trends, historical indicators, and macro economic impacts. We have a balanced portfolio and have learned that each industry has unique attributes that play into the success or failure of the business. For example, we invested in a bio-pharmaceutical company that is developing a new drug to treat a particular cancer. In this industry sector, companies will typically be acquired during their trial periods, whereas tech startups typically need to be generating revenue before being considered for acquisition. There are lots of influences that impact a business, and we try to assess the various scenarios, while understanding, as I mentioned, that nobody can predict all outcomes
- STRATEGY: The company needs to have a strategy. “Build it and they will come” has proven time and time again to fail. When looking at the strategy, we focus a lot of energy on go-to-market (GTM) as this is where most startups struggle. One of our entrepreneurs recently said, “I now have renewed respect for sales and marketing. I did not realize how difficult it is to get this right.” Money can be wasted on the wrong GTM. We advise our firms to focus on early customer acquisition to ensure that the market/customer is validating and guiding the plan.
- TECHNOLOGY: Not all “new” technology is good technology. As a VC looking to get into companies early it is important that we assess the technology and the viability of its promise of value. We look at a lot of AI tech companies who claim to be unique and promise a strong ROI to their future customers. What they often have in common is a naivety in recognizing what it takes to build something great. And that’s fine, because that can be part of having the passion and belief required to start a company. We are able to provide technology advisors who are subject matter experts, who have “been there, done that” and who can recognize the challenges that need to be overcome for success.
- EXECUTION PLAN: We look for teams that can clearly articulate their operational plan and demonstrate an understanding of how all the various pieces of the company fit together. Their ability to define their operational plans across the organization (engineering, sales, marketing, finance, support) provides confidence that they can stay on top of daily requirements. This can be tedious but important- something without which the business cannot effectively scale.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
PAT: The USA political divide is becoming a chasm and it is both a macro issue, as evidenced in the media’s depiction of the situation, as well as a local issue, as seen in local demonstrations/riots that are tearing holes in communities. If I could inspire a movement it would be around the reunification of the United States. And while I am aware this is a global issue; it would be good to start here at home hoping that once reunified we could focus our energy and resources on real issues that plague our world.
We are very blessed that 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. 🙂
PAT: I would love to meet Henrietta Fore the executive director of UNICEF. When I retire, I would love to bring my energy to help her with her mission.
This was really meaningful! Thank you so much for your time.