February 24, 2006

It takes longer than 15 seconds to make an investment…

Filed under: Start-up First Aid,Web 2.0 — Administrator @ 12:47 pm

I think you can learn a lot about life, relationships, and investing from watching sitcoms, especially US sitcoms – no joke!

For example, I have been watching season three of NBC’s Scrubs, a hospital spoof based on the lives of young doctors and nurses coming to age. In last night’s episode, the main character, Dr. John “JD” Dorian, commented:

“…a recent study showed doctors spend an average of 15 seconds with each patient – sounds insensitive but that is all the time we need…”

Reflecting back on JD’s comment, it stirred a thought, something that I’ve been noticing/observing for quite some time now – when it comes to investing, China based VCs a vast majority of China based VCs tend to spend more time listening to the opinions of other VCs than they spend on truly understanding the business and listening to opinions of the management team. So, let’s call this phenomenon “clubbing”.

I can totally understand that there is safety in numbers and that there are some benefits in building a syndicate (i.e. leveraging diverse relationships, experiences, and portfolios) but these spoils only go to the gold standard start-ups (i.e. those companies who fit the “Valley” venture model).

But this is China and as of yet there isn’t an acid test that is applicable to a majority of investments. The fact of the matter is that the VC environment in China is not only immature, but also untested (i.e. no serial entrepreneurs). Ultimately, lots of hidden gems fall through the cracks because their composition/profiles buck the conventional wisdom of what is an “A” team v. “C” team.

In my view, this is the time VCs should be backing less traditional ventures (i.e. anti-gold standard), when the market is less defined and investors are more accepting of China’s raw environment.

Turning back to our sitcom, Scrubs, (and yes, like all formula based sitcoms, there is a lesson here) JD recognizes the flaws associated with a 15 second diagnosis – let’s read what he has to say:

“…the problem with only listening for 15 seconds is sometimes you don’t hear everything, and when you finally figure out what they were trying to say you might have lost them forever…you can never underestimate the importance of listening…ultimately it keeps you in the moment so you don’t miss the things that really matter…”

A bit corny, we totally and unapologetically recognize this but, nevertheless, this is relevant to the point we are hoping to make…

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