Why Rod Tidwell is our kind of founder
One of the challenges of starting a new fund is winning competitive deals when going up against venture firms with established brands and track records. We recently lost a deal to a Tier 1 fund and here was the explanation given by the founder:
I’m really just terrified of [my startup] not working and feeling risk adverse when it comes to choosing investors since I’m taking a ton of personal risk…we are optimizing for brand…Nothing to do with me not liking you, knowing that you’re a strong investor, etc.
And this wasn’t just a line… I have known the founder for a while and he genuinely believes that optimizing for VC brand reduces the risk of his venture. In fact, he was fortunate to have term sheets from 7 top funds and ultimately chose from among them based on this consideration.
I don’t blame him. I get why he made the decision he did. But I did have one final question for him:
Have you ever seen Jerry Maguire?
When he told me that he had not, I was (a) relieved that I wasn’t investing in his company and (b) proceeded to explain to him that he went the route of Frank “Cush” Cushman rather than Rod Tidwell.
In case (for some crazy reason) you also haven’t seen the movie, here is some helpful context:
Jerry Maguire left his glamorous job at an established sports agency to fulfill his vision of founding a new firm that cared more about its athletes. Jerry tried extremely hard to secure Cush and Rod as the foundational clients of his new firm.
Despite Jerry’s courtship, Cush chose instead to sign with the well established, reputable agency where he knew exactly what he would be getting rather than taking a risk on Jerry and his fledgling firm.
Rod, on the other hand, chose Jerry.
WHY DID ROD CHOOSE JERRY?
Rod knew one simple truth: Jerry would do ANYTHING to try to make Rod successful because their success was intertwined. Since Jerry’s new firm couldn’t rest on the laurels of its past accomplishments, couldn’t hide away failures and disappointed clients amongst dozens of satisfied ones, couldn’t get rich off of an existing management fee stream, his only choice was to work harder. The future of Jerry’s career relied on “showing Rod the money” and he was going to do everything in his power to deliver results. Rod chose Jerry because he was fearless on and off the field. He didn’t shy away from putting his body on the line when it came to picking up the extra yard and didn’t shy away from choosing a sports agency that was unproven but had the potential for greater upside.
At Ground Up our founders are taking a bet on us, just as we are on them. Our relationship with our founders is one in which we intend to grow together, learn from each other and hold each other accountable. We think that long before our IRR will be a meaningful metric, our most important metric to track is our NPS — how likely our founders are to refer other founders to us. That is truly the test of how well we are doing in building the type of portfolio culture that we aspire towards.
The promise we make to our founders is that we will work harder. We will wake up every day trying to help them succeed and listen to their feedback along the way to get better. So the more they help us, the more we can help them. That is what real partnership means to us.
I understand why the particular founder mentioned above chose to go the route of Cush. A lot of founders would do the same. If you know that you are a Cush, we would love to meet you but let’s wait until Fund II once we have entered the category of “established”.
But if you see a little of Rod in yourself, reach out. We want fearless founders who dream of what a vc-founder relationship could be. Let’s build it together.
Onward and upward,
David
