20 VC 005 Be The Best CEO with Kent Godfrey

Summary Notes


In the 20 minutes VC podcast with Harry Stebings, Kent Godfrey, a seasoned tech entrepreneur and VC at Pond Ventures, shares insights from his transition from CEO to venture capitalist. Godfrey emphasizes the importance of timing in decision-making and the need for CEOs to trust their instincts, developed through experience and mentorship. He discusses the challenge of maintaining a "nose in, fingers out" approach as a VC, resisting the urge to intervene in portfolio companies' operations. Additionally, Godfrey highlights the value of operational experience for VCs investing at different company stages and the overrated importance of a VC's personal network. He also touches on the Internet of Things, suggesting its growth is hindered by the lack of a killer app and ease of use. Finally, Godfrey prefers founding teams with a balance of business and technical expertise.

Summary Notes

Introduction to the Podcast and Guest

  • Harry Stebbings thanks listeners for the podcast's success post-release.
  • Kent Godfrey, with a notable tech industry career, joins as a guest.
  • Listeners are offered a chance to win books and pitch to a VC by leaving a review and contacting Harry.

"So I just wanted to thank you all so, so much for helping us get to number two in the investing section of iTunes and the top ten for business." "Now, Kent has had a stellar career in the tech industry."

These quotes express gratitude for the podcast's success and introduce Kent Godfrey, highlighting his significant career achievements.

Kent Godfrey's Background and Entry into Venture Capital

  • Kent's entrepreneurial background spans from the 1980s to the present.
  • After a decade as CEO of two companies, Kent sought to apply his skills across multiple companies.
  • The desire to specialize in his strengths was his motivation to enter venture capital.

"I really decided I wanted to focus on the things I really did well and be able to apply them to multiple companies simultaneously rather than a single company."

This quote explains Kent's transition from a CEO role to venture capital, emphasizing his wish to leverage his strengths more broadly.

The CEO Role and Problem-Solving

  • CEOs deal with a variety of issues, from minor to major.
  • The aha moment for Kent was realizing he wanted to specialize in what he does best.

"You're basically the chief problem solver."

This quote encapsulates the CEO's role as a universal problem solver, dealing with issues of all magnitudes.

Timing Challenges for CEOs

  • The most challenging aspect for CEOs is timing crucial decisions.
  • CEOs can usually determine the right actions, but timing is more complex and often beyond their control.

"But figuring out when to do that and developing an instinct for that timing, I think, is the most important thing that a CEO needs to be good at."

Kent emphasizes the critical importance of timing in decision-making for CEOs, suggesting it's more challenging than identifying the correct decisions.

Strategic Planning and Adaptability

  • CEOs need a strategic plan with flexibility for timing adjustments.
  • External factors influence timing decisions, requiring adaptability.

"Yes, but the win part of it changes constantly because so much of what drives the timing decision on the win part is out of your control."

The quote highlights the dynamic nature of strategic planning, where the 'when' is variable and often dictated by uncontrollable external factors.

CEO Success Factors

  • Trusting instincts is key for a CEO to be successful.
  • Instincts guide CEOs through unpredictable and changing circumstances.

"I think it really comes down to trusting your instincts."

This quote underscores the importance of intuition for CEOs in navigating the complexities and uncertainties of their role.

Trusting Gut Instincts in Decision-Making

  • CEOs embody the collective wisdom and knowledge of their company.
  • Being informed allows CEOs to have accurate and reliable gut instincts.
  • Trusting these instincts is crucial for making important decisions without hesitation.

"you, above everyone else in the company, kind of represent the collective wisdom of the company and knowledge of the company."

This quote emphasizes the role of a CEO as the focal point of a company's collective intelligence, highlighting the importance of their decision-making instincts.

The Nature of CEO Leadership

  • Some individuals possess a natural inclination or "gene" for leadership.
  • CEOs with this "gene" who continuously develop it can achieve outlier performance.
  • Building and honing leadership instincts is part of evolving into an effective CEO.

"I think there's a gene that some people have and some people don't, but I think that that's the starting place."

Kent Godfrey suggests that certain individuals have an innate predisposition for leadership, which serves as a foundation for becoming a CEO.

Developing CEO Skills

  • Mentorship is key to developing CEO skills.
  • Learning from experienced individuals can enhance a CEO's abilities.
  • Willingness to listen and learn from mentors is essential.

"Yeah, I think the main thing is building mentorship relationships with a handful of people that have been there, done that, and just being willing to listen to them and learn from them."

Kent Godfrey advocates for the importance of mentorship in nurturing the skills necessary for a CEO, emphasizing the value of guidance from seasoned professionals.

Attaining Mentorship

  • Utilizing one's inner circle is preferable for finding mentors.
  • Relationships formed through happenstance are more valued than reaching out to strangers.
  • Authentic connections can lead to more effective mentorship.

"I would more use the inner circle. More people that you have just by happenstance met along the way."

Kent Godfrey recommends leveraging existing relationships within one's network to find mentors, rather than cold-contacting individuals through platforms like LinkedIn.

Balancing Ego and Leadership

  • A big ego can be an asset for entrepreneur CEOs aiming for outlier performance.
  • Successful CEOs know when to check their ego and listen to valuable advice.
  • The challenge lies in being confident without crossing into arrogance.

"But it's one that the really successful ceos are capable of kind of checking at the door when it's necessary and listening to people who have important things to say to you and really absorbing those things and practicing and learning from them."

Kent Godfrey discusses the importance of balancing ego with humility, highlighting the ability of successful CEOs to listen and learn from others as a key to their success.

The Role of Naivete in Innovation

  • Naivete can be a driving force for CEOs to achieve outlier performance.
  • Being unaware of all the challenges ahead can encourage leaders to pursue their vision.
  • This attribute was discussed by Kent Godfrey and Steve Jobs, emphasizing its significance.

"And one time we spent a solid hour talking about naivete. Not about craziness, but naivete and how important that ingredient is to successful ceos achieving outlier performance."

Kent Godfrey shares an insight from a conversation with Steve Jobs, where they discussed the importance of naivete in the journey of successful CEOs, suggesting that a certain level of unawareness can be beneficial.

Personal Anecdotes and Influence

  • Kent Godfrey had personal interactions with Steve Jobs in the early 1980s.
  • These discussions have influenced his views on leadership and CEO performance.

"And I had an opportunity in the early eighty s to spend quite a bit of time with Steve jobs, coincidentally."

This quote reveals Kent Godfrey's personal experience with Steve Jobs, which has informed his perspective on the qualities that contribute to a CEO's success.

Early Career and Encounter with Steve Jobs

  • Kent Godfrey worked at Variant Associates in Palo Alto after graduating from undergrad.
  • Steve Jobs' mother was the office admin in his department.
  • Upon her retirement, Steve Jobs attended the department's lunch for her in 1983.
  • Kent had the opportunity to talk with Steve Jobs about entrepreneurship during this time.

The first company I ever worked for when I graduated undergrad was a company called Variant Associates down in Palo Alto. And Steve Jobs mother was the office admin in our department. And when she retired, the department had a lunch for her and Steve came along. And this was 1983, okay? So it was kind of the first time Steve Jobs was becoming God, if you will, to the entrepreneurial world. And so it was that opportunity that I had to just sit with him and just talk entrepreneurial shop for a little while.

The quote describes Kent Godfrey's early career experience and a memorable encounter with Steve Jobs, highlighting the significance of Jobs in the entrepreneurial world at that time.

Transition from CEO to VC

  • Kent has been a venture capitalist (VC) for the last ten years.
  • The most challenging part of transitioning from CEO to VC is what Kent calls the "line between nose in and fingers out."
  • As a CEO, one is deeply involved in all aspects ("nose in and fingers in").
  • As a VC, one must keep "fingers out" but still be alert to potential issues ("nose in").

Yeah, that one's really easy. That's what I call the line between nose in and fingers out.

The quote captures the essence of the challenge Kent faces in his role as a VC, where he needs to balance involvement and restraint.

When you're a CEO, your nose is in and your fingers are in and you're just all over everything. When you flip the table and you become the VC and a board member and a representative of the money you've invested, your fingers really need to stay out. Your nose is in and you're constantly smelling for things that don't smell right. And you're letting the CEO know that your sense is that this or that is not really going in the right direction, but you really need to stop at that point and you can't really stick your fingers in there like you're so tempted to just kind of nudge the CEO aside for a time being and go fix those things.

This quote explains the difference in roles and responsibilities between being a CEO and a VC, emphasizing the restraint required as a VC.

Involvement as a VC

  • As a VC, Kent would address issues with the CEO rather than directly intervening.
  • There are exceptions where direct involvement is appropriate, such as when Kent's skills and availability are the best fit to resolve an issue.
  • An example given is the sale of a company, Liverail, to Facebook, where Kent got involved directly with the CEO's permission.

Yes. Now, in some instances, and liverail being a great example of that, that's a company that we sold out of our portfolio about six months ago to Facebook with the permission of the CEO, or at the request of the CEO. In numerous instances here, I would get directly involved with some specific issue where my skill set and my time availability lent themselves properly to being the best way to sort these issues out.

The quote provides an example of when Kent found it necessary to become more involved in a company's affairs, demonstrating the flexibility required in the VC role.

Frustrations in the VC Role

  • The frustration of not being able to directly fix problems as a VC is significant.
  • Kent finds it difficult to watch companies make mistakes, knowing it's part of their learning process.

I would say just how frustrating that feeling can be as a VC. Not being able to just jump in there and do it and tell people what to do as a CEO, that's just so much more efficient as a board member investor representative, where you have to watch the CEO and the organization make mistakes and know that that's part of the learning process. It can just be very painful.

This quote highlights the emotional challenge of being a VC and the need to allow companies to learn from their own mistakes.

Enjoyment in the VC Role

  • The most enjoyable part of being a VC for Kent is the ability to work with multiple companies simultaneously.
  • Kent enjoys the variety and the non-monotonous nature of the VC role compared to focusing on a single company.

I think the most enjoyable part is being able to do this with multiple companies simultaneously. It just doesn't get boring.

The quote reflects Kent's appreciation for the diversity of experiences and learning opportunities that come with being a VC.

Flexibility in Venture Capital Engagements

  • Venture capitalists like Kent Godfrey at Pond engage with a limited number of companies.
  • Pond's approach differs from the traditional model, which involves a larger portfolio of companies per partner.
  • A smaller portfolio allows for deeper involvement and the ability to bring more value at an operating level.

Yeah, and at Pond, we do four or five companies per partner, so we're not in that more traditional Sandhill road mode of ten to 15 companies per partner, where you're not really dug in very deeply on any of those companies.

Kent Godfrey explains that Pond's strategy involves a more concentrated portfolio which allows for greater depth of engagement with each company.

Yeah, I mean, obviously it enables me to give 20% of my time to each one of five, which I think is enough to really get to know the team well enough, get to know the business well enough, the industry they're in, to be able to really bring value at an operating level.

This quote emphasizes the belief that dedicating a significant portion of time to a few companies is sufficient for a venture capitalist to become intimately familiar with the companies and thus provide substantial operational value.

Venture Capital Career Pathways

  • Kent Godfrey believes it is unlikely for someone to enter the VC industry directly from university.
  • He underscores the importance of having operating experience relevant to the stages of companies a VC invests in.
  • Pure startup experience might not be beneficial when investing in a pre-IPO company, and vice versa.

Oh, I think anything's possible, but I think that's unlikely. And I think even more important is vcs invest at all stages of companies from very early to very late. And I think it is important that you have operating experience at whatever stage or stage is you're investing in.

Kent Godfrey acknowledges the possibility of entering VC from university but deems it unlikely, emphasizing the value of relevant operating experience across different stages of company growth.

Misconceptions of Venture Capital

  • Kent Godfrey considers the overrated value of a VC's personal network to be a major misnomer in venture capital.

Overrated value of the VC's personal network.

This quote captures his view that the significance of a venture capitalist's personal network is often overstated in the industry.

The Future of the Internet of Things (IoT)

  • Godfrey sees the future of IoT as forthcoming but currently lacking a "killer app" for widespread adoption.
  • He identifies ease of installation, ease of use, and the actual value proposition as areas needing improvement for IoT to take off.

Coming, but lacks the immediate near term killer app, quote unquote, to make it a here and now.

Kent Godfrey expresses that while IoT is on the horizon, it is missing an application that would drive immediate and broad market appeal.

I think it's ease of installation and ease of use mapped against the actual value proposition.

This quote suggests that for IoT to succeed, it must become more user-friendly and demonstrate clear value to consumers.

Preferences in Founding Teams

  • When asked about his preference for solo founders versus founding teams, Kent Godfrey prefers a duo, specifically one with business and one with technical expertise.

Two. Two, business and a tech.

Kent Godfrey succinctly states his preference for founding teams made up of two individuals with complementary skill sets in business and technology.

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