In baseball, wins are built on a lot of small moves over the course of a game--a hit that just misses the foul pole, being safe by an inch to break up a double play, or bunting.
The other day, a friend that wasn't familar with the game asked me why anyone would bunt and give yourself up. Doesn't it cost you an out?
Any fan knows the answer:
Bunting moves the runners over.
If you bunt, and there's a runner on first, you get that runner down to second base and then they're 90 feet closer to scoring a run--and generally, hits into the outfield can score that runner from second. Sure, you lose the out, but you increase your chances of winning over the long run.
I led seven investments in my time at First Round Capital, starting in January of 2010. Two of the companes, GroupMe and Singleplatform, had very successful exits within their first two years. This week, news of a third exit from that portfolio was announced--Crunched got bought by Clearslide, their nearest competitor and a privately held company.
A few people have congratulated me on it--and to be honest, it feels a bit weird. Why? Because anyone with a basic knowledge of venture capital can figure out that when a startup with $39mm raised buys another company, it's not a huge outcome. It's nice to be able to say I haven't gone through any bankruptcies yet in my three and a half years of leading investments, but we all know we're in it for the big wins.
These types of exits, when you return some investor money but it isn't a huge win, is like moving the runners over in baseball. Sean Black, the founder of Crunched, did a monumental job trying to move Crunched forward during some very difficult times. It took special effort to get a home for his team and some money back to his investors. It wasn't the gamewinning shot in the bottom of the ninth to win a Championship... but he deserves a good pat on the back--the running handslap after you do the little things on the field that ultimately lead to victories over the course of a season.
Maybe that bunt means the gamewinning run on the next play, and maybe it doesn't. In the long run, this is the way you play the game. You play smart, communicate with your team, take all the advice you can, and when you do all the little things you need to, you'll come out ahead. I'd be thrilled to work with Sean again on a future startup or have him lead sales at any one of my portfolio companies. That's the way I work with all of my portfolio companies. I invest in people that I'd like to work with across multiple startups and I try to act in a way that would make them want to work with me over the course of their career as well. Sean is a standup guy, of the highest character, and he learned a ton over the last three years.
So if you see Sean, or if you hear about one of these similar kinds of exits, don't just mindlessly say "congrats". It just seems fake and treats the exit like its any other success story. Acknowledge the special effort that went into bringing about a soft landing when things don't go up and to the right from the beginning. That's often harder to do--to work at something that didn't take off like a rocket, knowing that you're not getting rich.
Give a little fistbump and say, "Hey, way to move the runners over." This way, the founder knows that you know it wasn't easy, other people might have easily given up, and they worked hard to finish out the right way, regardless of the outcome.
Way to move the runners over, Sean and Team Crunched. Drop me a line when you have your next idea.