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3 Clichés to Live By

Clichs exist for a reason: They usually contain a grain of truth. VC Fred Wilson explains when conventional wisdom is just that–wise.

Choosing the road more traveled isn’t always a bad idea, according to venture capitalist Fred Wilson.

Wilson is the managing partner of two VC firms–Flatiron Partners and Union Square Ventures–and author of the blog AVC. His blog has featured several posts on the subject, highlighting situations in which the conventional wisdom is… well, wise. Here are three instances, compiled from Wilson’s “VC Cliché of the Week” blog series, in which following the norm isn’t such a bad thing.

Cliché:

When it comes to raising money, a rifle shot is better than a shotgun approach.

Why you should embrace it:

Netting VC funding is tough. But you can save yourself–and your investors–from wasting time by thinking carefully about the firms you want to target when fundraising, writes Wilson.

“There is a tendency to build a short list around brand name firms,” he writes. “How many times have I heard, ‘We need a top tier West Coast VC in this round’?”

While the top tier West Coast firms are often good investors, he explains, their brand reputation doesn’t necessarily make them the ideal investors for your business. Wilson suggests building a short list of firms that are already highly likely to be interested in your venture, and concentrating your efforts on those groups–rather than making scattered attempts at the big name firms.

Getting it right the first time will make a big difference, he says.

Cliché:

It’s better to beg for forgiveness than ask for permission.

Why you should embrace it:

“Call it the Napster effect,” Wilson writes. “You’ve got to steal the labels wares, because you’re never gonna get a license.”

According to Wilson, technology is moving fast and savvy entrepreneurs should focus on innovating first and creating a rule book later. In instances when you are pioneering uncharted territory, he advises, the best thing to do is hit the ground running–and make adjustments as you go along. If you can gain enough support from your customers, you can actually influence the way “rule makers” react to your product–just look at share economy companies like Uber and Airbnb, for example.

“That’s why YouTube is going to win bigtime. They’ve built the audience. They’ve built the value added services that make their service fun to use. And eventually they are going to get the content owners to play ball,” writes Wilson.

Cliché:

People fear what they don’t understand.

Why you should embrace it:

To illustrate this point, Wilson cites a real-life example from his earlier days as an investor:

Once upon a time, we had a very early stage company in our sights. We met the company shortly after it was formed, became users of the service, promoted it to a lot of our friends, and got to know the management team really well.

When it came time to consider an investment, we did what all good VCs do: We got on the phone and called 10 people in the industry that we knew really well to get their take on the company’s service. We heard pretty much unanimously that they would never use it. We passed on the investment.

But it was a huge headfake.

According to Wilson, within six months, all of the people that he had called became customers of the company–despite their initial reservations. Wilson suggests that his own proselytizing may have been the very thing that changed their minds.

“When you get unanimous rejection you are actually hearing fear,” he writes. “And fear should be interpreted positively, not negatively. It meant that all of our friends didn’t understand the company’s service and were afraid of it. Probably because it was highly disruptive.”

    

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3 Clichés to Live By
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