

Interesting funder's point of view - tomerb

Yossi Vardi is the biggest known Angel of internet start-ups in Israel. One of his famous success stories was ICQ which was funded by him and sold for $287 million dollars in June 1998.<p>I read an article about him in the Israeli "The Marker", which points out a few interesting things about the entrepreneur - funder relationship.<p>I've translated a saying of his that was quoted in the article:<p>"When I hear a pitch by an entrepreneur I look for a few things in them. First, they have to be very talented. I'm not interested in good or great entrepreneurs. I want them excellent. They have to be nice people, since some investments don't ripe in early stages. I always tell my wife that in case the investment fails in early stages, at least we gave a "scholarship" to a good guy and not to some idiot. Moreover, they have to be focused on the arena I like which is the internet. If they meet those criterias, there is a good chance I will invest in them. What exactly they are doing is less important. Business plans are a wonderful part of science-fiction. They are developed for people who love sausages and don't know what are they made of. How can one conduct a 'due diligence' on something that is only in his mind."<p>I would love to hear your thoughts,
Tomer.
======
cperciva
Sounds to me like this is pretty much the YC investment strategy: Fund good
teams, and ignore the business plan because that's almost certainly going to
change anyway.

~~~
alex_c
See, there's one thing I don't really understand about the "fund good teams,
ignore the business plan" strategy: can you ever consider a team to be "good"
if they can't present you with at least a plausible business plan? Yes, the
business plan will likely change, and being adaptable enough is important, but
can a team be "good" without demonstrating the most basic ability to plan
ahead?

~~~
abijlani
I think he does not mean don't build a business plan. The process of building
a business plan is a great exercise for any startup. It helps them figure out
a lot of holes in their plan or lack thereof.

In a startup things are constantly changing so having a good team means they
will do anything to overcome any obstacle. It is a quality that far exceeds
any business plan.

~~~
DaniFong
I'll second that writing the business plan is extremely helpful for the
business itself. Like almost anything else, when we applied high standards to
what we wrote, we uncovered a lot of unchecked assumptions, and good ideas,
and manner of argument for your business. In the process of writing the plan,
we also created it. We managed to nail down many of the engineering milestones
we'll want to hit before our next round, went through a half dozen design
iterations, including the introduction of two technologies that may be
significant breakthroughs, created a multi-physics computer model of our
engine and drivetrain, located automotive design and CAD contractors who've
been providing us great schematics and visual concepts, and have clarified the
entire development, procurement and hiring schedule.

------
portfolioexec
Not overly sure if it's comparable, but anyone watch X-Factor/American Idol?

Making the comparison: 1\. great team = likeability of the singer as a person
2\. great business = their ability to sing

How many singers have 1. but still fail? How many seem to have both and still
fail?

I think you have to be top dog in both areas.

But then I'm not an investor :p

------
shafqat
I love this guy. Yossi keeps it so real. He says he's lost so much money
funding "great" business plans that he doesn't give a shit about them anymore.

He invests in great teams. That keeps it simple.

~~~
ram1024
i would consider finding great people harder than finding a good business plan
or idea. you're essentially banking on the "diamond in the rough". hoping the
people you find will produce something outstanding. it's risky both ways, and
i guess you have to go with your instincts.

------
maxklein
Well, this sucks for all the shy guys here. Guess we'll have to go to Diana
King for our funding.

~~~
mixmax
Nice doesn't exclude shy. I know lots of shy people that are really nice.
Usually you just have to get them one-on-one and spend five minutes talking
about something they find interesting and poof the shyness is gone.

------
jbert
I guess it also depends on how good you are at assessing people as opposed to
plans.

Given how hard people find interviewing, I'm not sure it's that obvious to
spot great people.

~~~
tomerb
I guess he doesn't considers people who have a hard time interviewing as
"excellent" as he said.

~~~
jbert
Sorry, I meant "interviewing" from the perspective of the interviewer.
Reliably selecting good people to join your company is often thought of as a
difficult task.

He's trying an analogous evaluation of the founder - and giving it more weight
than the paper plan. Possibly quite reasonably, but it seems the success of
the approach relies heavily on something people seem to find difficult.

------
rodmaz
Absolutely true! Great companies are a result of smart and hard-working
entrepreneurs who form great teams. I believe being nice does not exclude
neither the confident nor the shy types. But being confident should not mean
cocky or arrogant. In a start-up you should be willing to learn everyday and
sometimes you won't hear nice things. Those who learn and adapt fast, and are
also nice thrive and build great companies.

------
nocivus
I must say that it's the first time I see a funder not really worried about
the business plan. And I must agree 100% with what he says; If the team is
excellent and passionate with what they are building, then there is a good
chance that something great will come out of it. How you will make money from
it becomes almost secondary, since it will show itself during development.

------
known
Isn't it obvious?

~~~
kirubakaran
Common sense is not common.

