A blog about social, economic and spiritual networking

Wednesday, June 15, 2005

New Breed of CEO: Beyond the Bootstraps

So, last week I posted in My Blue Flame: CEO Position for an Early Stage Company:

"In retrospect, I am actually a lot better at building businesses than starting them. I have a finance and accounting background, direct sales experience, and technical expertise honed on some of the world's most interesting, important and ambitious projects.

I've been really blessed by being able to make "accurate market hypotheses" time after time. I think much more like a venture capitalist than an entrepreneur, perhaps because of my finance and economics background."

Since then, I've been finding a number of interesting posts by both serial entrepreneurs and VCs alike about an interesting trend:

Entrepreneur Marc Pincus says this in his post Views From the Front Lines:

"Where's the leverage? --- So the big dilemma facing most seasoned entrepreneurs today is about leverage. The VC's and other investors get plenty by making multiple bets within large funds. they can be reasonably confident that over their fund's life they can deliver good returns and make good and sometimes obscene money. Entrepreneurs have to make totally concentrated bets and wait several years to see if they pay off at all."

In another post Marc says this:

"I wonder whether the best entrepreneurs will also evolve to this merchant banking approach where they create much more leveraged investment opportunities to pursue new markets with far greater capital from the outset rather than bootstrapping. in this new world, we may see a complete blurring and mashing of entrepreneur, VC and hedge fund."

Tom O'Neill comments on Marc's posts calling this Closing the Gap between Capital & Innovation:
"Mark Pincus has an interesting post about the possibility of a blurring of the lines between entrepreneurship and venture capital. If this is a trend, it's certainly one that I would encourage--the idea of co-creating vs. waiting is one that makes a great deal of sense. I believe there is a huge opportunity to create a new VC model that combines the best attributes of VC, EIRs and incubators."

As an experienced CEO [see my LinkedIn profile] and blog post about my availability, I've already bootstrapped dozens of companies. To be honest, I'm out of boots and out of straps. I've traded them for stock, options, warrants and a bit of cash. I've already proven I can make gold out of straw. The last thing my wife wants to hear is that I have another one of my "kooky" ideas that will change the world that I want to run out my, er I mean *our*, family dining room. I've had way too many computer racks in the basement and too many T-1 lines run to the house.

Marc and others are picking up on a trend. Some of the best early stage CEO/entrepreneurs, like me, are not necessarily motivated by starting "YABI" - "Yet Another Big Idea" (I just coined that myself - like it?) to pitch to investors. Been there, done that! Many of us want to apply our skills, talents and experience at the point where *our* entrepreneurial instincts and leverage is maximized, and for me, that is between the 'A' and 'B' rounds.

The world is waiting, not for the next YABI, but the next company to execute a successful strategy under the direction of an experienced early-stage CEO to capitalize on an accurate market hypothesis.

Based on that accurate market hypothesis, experienced and successful entrepreneurs/CEOs can sense a multiplication of value (represented by the expansion of the net present value of discounted future cash flows) ahead of time and craft a strategy and lead a team to capitalize on that market movement.


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