First Story in Radio

Here's my first story. It's not new. It's one of the "Maxims" I wrote when I was covering the short-lived incubator bubble in 2000.

Load for Bear

“Son, you may think you’re after turkey” said the mountain man to the game hunter, “but if you’re headin’ into these woods y’better load for bear.”

Good advice for incubators. If you want to come alive out of the thicket you’ve entered, we suggest you load for bear. Translation: Fill the coffers as full as they’ll go. Start a VC fund. Control as much cash as you can. Need we find more ways to say it?

Here are five reasons you should create a VC fund:

1. a) You will of course want to make follow-on investments in the companies you have incubated. In the winners, that is. b) Resist the temptation to keep losers alive longer than the time it takes you to know they’re losers.
2. You will be more attractive to entrepreneurs. Their reasons may not be the best (they may hope, for example, that you’ll ignore 1b above), but there really can’t be wrong reasons for liking deep pockets.
3. Later-stage investing is easier. Period.
4. The bear has already arrived, stuck his nose in the air, and sniffed us before we could sniff him. It was about April 1. And although markets are rising and optimism remains, we now know for sure the bear is in the area. Money may never again flow the way it did in the year ending April 1. While the markets are making any comeback at all, make your case for managing lots of other people’s money. It’s a window that may close any day.
5. Another of our Maxims says that you have fourteen months in which to show a winner before you are yourself branded the opposite. If later-stage investing is easier, and be assured it is, a healthy fund will allow you to buy a winner. Remember that the craze for incubators arose largely because CMGI chose to call itself an incubator, although the majority of its big-win investments were done at later stages. The same fogginess of perception will benefit you. If you possess a winner, any winner, no one will really ask too closely at what stage you bought into it. You will, with a great degree of fairness, be perceived as an incubator that finds winners.
6. Being a winner by virtue of having bought a winner will buy you more time to incubate, if that is what you really want to do.