What is a Venture Technologist?
Posted Thursday, August 21st, 2008 - 1:03 pm by mwhitney
When I left Emma in September 2007 to start Remarkable Wit, my primary goal was to help startups navigate through the difficult road ahead as a technology partner. I had very few people in the business community actually see the potential or possibility of such a model, but I was constantly running into startup entrepreneurs who wanted to find a developer who would work at a discount in exchange for equity and founder status. Clearly, there was a way to make this kind of model work, however admittedly, it would not be as simple as I had hoped.
In order to effectively be a technology partner with a startup, you have to have the backbone to work on behalf of both companies objectively. When the venture technologist (VT) is a single developer, there is little to worry about. The developer has to make sure that their bills are paid long enough to focus in a relaxed state to develop a successful application. Not really too complex to craft that deal, or adjust over time.
When the VT is a firm however, the deal is closer in comparison to a standard venture capital (VC) deal in many ways. There are however, some critical differences that I’ll highlight. Unlike a VC, which has little more than money and connections to offer in a deal, a VT firm is a critical part of the success of the startup at every phase. There are rules of engagement that both the startup and the VT firm must adhere to in order to ensure the best chance for success, and I’ll highlight a couple of these for discussion.
Adherence to Process
Process is critical for order, measurement and accountability. When a startup entrepreneur enlists a VT firm, they will become subject to the VT firm’s process because they have the experience and methods required to make the most progress in the shortest time possible. These processes cover all aspects of the business that interact with technology from authority of the CTO to make critical decisions, to fixing bugs on deployed systems.
Many entrepreneurs feel that because they are paying for production, they are entitled to drive the process as they see fit. This is self-defeating and should not be permitted by a respectable VT firm. Software development, systems architecture and customer support IT systems are disciplines that have been performed, studied and documented for decades. The VT firm’s expertise should be in helping each business pick and implement the proper process for the venture, and lead that process without compromise. This is a huge advantage of working with a firm as opposed to an individual.
Financial Transparency
As a Venture Technologist, you take an underwriting risk on every venture that you sign up for. As such, you have to ask for detailed financial projections, current resources and plans for raising money. This is so that you don’t sign up for a deal that is unrealistic. On the flip side, it’s critical that the VT firm show the startup entrepreneur what the cost of operations will be, with fairly unlimited transparency. The VT firm should operate with integrity on the premise that it is charging the entrepreneur what is required for operations, but not gouging the entrepreneur for profit during development.
Obviously, this is not something that many firms would be comfortable with, but a strong company is built on trust, and nothing breaks up a marriage faster than questions about money.
Executive, Operational and Production Coverage
A true Venture Technologist firm must cover the entire breadth of a technology department for a company, otherwise it will be ultimately ineffective in allowing the entrepreneur to focus on vision and sales. From CTO, to system and experience directors, to front-end, back-end and systems developers, all aspects of technology should be covered and provided by a qualified venture technologist firm. All of these aspects must be implemented, and done so without all the glitches of personnel dynamics and integration. A strong VT firm will be able to step in, and fire on all cylinders without a hitch to give a startup a velocity that they wouldn’t be able to achieve otherwise.
Ok, well, does it work?
Yes. We have two major VT deals in action right now, and two that we are working with to get in gear. We’ve learned a lot about how to do this, and all of the sensitive areas around these deals. There are also some issues with how to best handle payments, which admittedly we have done “creatively “in both deals to date. However, it’s clear that technology entrepreneurs must be free to think about the service and the future of the business, and VT firms may be the answer to the risk that many entrepreneurs face when trying to make their vision a reality.
» John Chapin September 12th, 2008 at 2:46 pm
The paragraph on ‘Adherence to Process’ makes a very valid point. When comparing this relationship to something like construction, the entrepreneur plays the roll of the architect and the VT firm is the general contractor. It would be a waste of the architect’s time and talents to worry about the execution of most engineering details. So let your VT firm handle about the software development life cycle as you would have an HVAC firm worry about a thermodynamic cycle.
» Lakshmi Mareddy October 15th, 2008 at 11:05 am
I do like the transparent financial angle. In reality, most businesses charge more than they should, to buffer against potential downtime, and most enterpreneurs who could not have even dreamt that their idea would take off, suddenly get too big for their boots, and act fiesty, and its too late to back out of a certain deal. I would like to know, how you would handle the usual motley mix of things?