Interview, Fireside Chat
The Ultimate Guide to being an Operator-Investor -- Sri Batchu & Harry Stebbings
- Operators lacking 15+ years of people management experience may struggle to understand Venture Capital, whereas operator-investors may secure better allocation than larger investors provided they maintain moderation and prioritize their core jobs.
- Operator-investors are expected to respect standard work hours for outside activities, with the prediction that top performers will dedicate off-hours to generating leads and converting sales rather than pursuing unrelated ventures.
- Deal flow quality is expected to be higher with high-reputation warm intros and direct relationships, while founders unable to secure these introductions via existing systems like OnDeck will likely struggle to build companies or secure funding.
- Investors may support founders with tenuous connections if the introduction is specific and includes dual opt-in, but will likely avoid meetings with companies that are competitive, perceived as competitive, or anticipated to be competitive in the future.
- When investors hold portfolio companies or potential acquirers (e.g., Ramp) are in the market, investors expect to act with extreme transparency to prevent influencing purchasing processes, while simultaneously planning to aggressively hire talent from portfolio companies despite labor market concerns.
- Talent retention is predicted to be the portfolio company's responsibility, with investors viewing companies that successfully keep their best talent as heroes, while the speaker plans to ruthlessly hire from these portfolios, rejecting the notion that it constitutes a conflict.
- Future investments are expected to rely heavily on leads from founders the speaker works with, favoring founding teams where one individual acts as a storyteller and the other as an operator, as individuals rarely excel at both roles simultaneously.
- Founders are expected to possess a secret vision, demonstrate relentless execution, and be excellent storytellers who can read the room, adjust detail levels, and leverage likability for fundraising and hiring, though these skills may not scale for daily operations.
- The speaker anticipates that first-time founders differ significantly from experienced ones and that some operators ineffective at job management may be successful founders, while noting that 25 deals is insufficient for an operator angel to gain conviction.
- Operational expectations include an experimentation-driven culture with no established playbook, requiring founders to creatively generate their own growth strategies and leveraging context switching to build intuition.
- Risk profiles for investors include failing to switch from rational evaluation to optimism, getting stuck on the risk bar, or saying yes without conviction to avoid being perceived negatively.
- Strategic plans include running a scout program, raising a micro fund, or potentially a macro fund, with operator angels expected to use varying check sizes and the speaker utilizing their network to provide confidential, honest feedback on potential hires.