Friday interview with VC Rick Segal

This week wasn’t hard. Who should be the interview subject? The guy that was our inspiration to get into blogging last September.

Rick Segal is a general partner with JLA Ventures in Toronto. Does Seed, Series A and Series B investing, and is the king of the “no harm no foul” 30 minute meeting with anyone who has a neat tech idea. We’ve done deals with his firm and they’re a bunch of our favourite people.

Rick is also a widely read blogger, authouring “The Post Money Value“. Great Technorati rating as well.

Question #1. Given the choice, would you rather invest in a strong team with a weak idea, a weak team with a killer idea?

Answer: I would always go for the strong team. What’s funny about this question -which gets asked a lot- is that most strong teams don’t chase weak ideas, rather they take an idea, make it strong or grab a strong idea. People always matter.

Question #2. Would you call the “friends and family round” actual bona fide investing, or merely charity?

Answer: Friends and family is usually -and should be- helping out. Period. The expectation should be zero or a tax loss receipt. I say that, not to be harsh, but to remind those start up folks, to set expectations low enough that down the road, problems are not created with value/liquidity expectations.

Question #3. Is the Angel investor network in Canada robust enough?

Answer: No. Another 10 million dollars in angel money flowing into new ideas, projects, etc, would be great. I got the 10 million number from the number of $100k – $1MM chunks of money being asked for in the last 12 months. A more active/deeper angel network would grow the deal flow for sure.

Question #4. What is the primary mistake the entrepreneurs make when they come it to pitch you on a Series A round?

Answer: Not telling me what problem is being solved and why somebody would pay for it. Ignore all the fluff/hype/buzzword nonsense. It really is a simple opening gambit. Here is the problem, these are the people impacted, this is the solution and cost. They’ll pay because. From those simple words, everything else springs forth.

Question #5. Do you ever suffer from the urge, as a VC, to grab the steering wheel from the CEO and drive the company yourself?

Answer: Yes, and it usually involves a multi-car pile up. The rules are simple. I am not the CEO. If there is a belief, at the board level, that I should be the CEO, the action item is to replace the current CEO with somebody that can be supported by the board. All too often the ‘shadow ceo’ activity of a VC creates a self fulfilling prophesy of a bad/dead CEO because by the VC’s actions, you’ve killed that person’s ability to be effective. Very bad stuff.

Question #6. You’re a MSFT alum. Why has Microsoft been unable to do anything with success (Zune, Vista, XBOX 360, etc.) for at least the past half a decade or so?

Answer: Interestingly, the products you mention have not been out 5 years so hard to really comment on them. Given the numbers that MSFT produces, including the latest ones, I’d probably label that success. But at the Macro level of “WOW” stuff being a bit lacking, I think it is the nature of big/massive corporations to slide into ‘safe’ from a market share/business perspective. With 65,000+ employees, it is not easy to maintain the culture of a start up or the free wheeling machine of the 80s/90s. Amazon, Oracle, even Google, all have growth/big company challenges ranging from beating the street to keeping the troops happy. With stories about people leaving wonder-kid Google, there is simply an almost unavoidable cycle/trap of bigco disease which just happens. MSFT has some of the brightest people of the planet working for her right along side some of the biggest corporate butt wipes imaginable. Which, of course, describes most large companies.

Question #7. What’s on your iPod?

Answer: Briefs. I’ve never really liked that loose fit boxer stuff. Oh, wait, sorry, the iPod question. I had an iPod but I gave it away as part of a charity thing for some kids. These days, I have my mobile music on a memory card inside my Blackberry 8800.

Thanks, Rick.

MRM