Bush lore

A bit of shale slipped off the cliff into the muddy waters below, dislodged by the tall, well-dressed American as he stepped carefully down from the path to get a better look at the waterfall.

“Not down there,” said one of the group. “Be careful,” warned another.

“Are you sure?” joked Bill Reichert. “Isn’t this what passes for a lookout platform in New Zealand?” New Zealand’s lack of safety barriers on our bush walk had intrigued the prominent American venture capitalist since we’d set off.
It wasn’t quite the entrepreneurs’ workshop we’d been expecting. Reichert had been asked to run a workshop at Morgo, the annual entrepreneurs’ conference at Waitangi founded by Jenny Morel, but had despaired of ever getting outside during his time in New Zealand.

Investment New Zealand, the government’s inward investment arm, brought Reichert to New Zealand in the hopes of persuading him to part with a few million dollars for our budding startup sector. With this in mind he’d been shuttled to meetings up and down the country, if not to find investments then at least to impart some of his Silicon Valley know-how.

The last stop on his whistle-stop tour was Morgo. It was Reichert who’d suggested taking the workshop outside.
So here we were: just a remnant really, from Morgo. Like the conference, the bush walk was not so much for Reichert to impart pearls of wisdom, but for us to network, to meet people that might one day become useful — if they didn’t fall off a cliff, that is.

After stints with McKinsey and Company and the World Bank, Reichert co-founded several venture-backed technology startups before setting up his own company to “accelerate” startups to the investment stage. But after losing half of his original investors’ money in the dotcom bubble, Reichert and his colleagues reinvented themselves as Garage Technology Ventures, an early-stage venture capital firm.

“The major lesson we learnt was don’t chase fads,” he says, a lesson that’s at the core of Garage’s success, and his Morgo speech. Today entrepreneurs have to think differently if they are going to survive. The old rule was about creating wealth; now it’s about creating value, he says. “Too many startups can be replicated by two grad students at the weekend. If you’re that sort of company, we don’t invest in you.”

The biggest mistake entrepreneurs make is adopting the ‘build it and they will come’ mentality, says Reichert. “There’s this mythology that entrepreneurship is built around invention.” But there’s a fundamental difference between an inventor and an entrepreneur, he says.

“The inventor will say, ‘God dang it, don’t you see how clever this invention is? It will solve your problem’. While the entrepreneur says, ‘oh crap, that innovation is not going to solve the problem. Let me figure out a way to solve the problem’.

“As soon as you fall in love with your solution, you get blinded, you get rigid and you increase the chance you’re going to fail.”

But there’s a more fundamental dimension at work in the entrepreneur-investor relationship. “VCs invest in companies because they fall in love with them. It’s not an analytical process; it’s an emotional process.” It’s not chemistry either, it’s “inevitability”, he says. “It’s when an entrepreneur tells their story, and you think ‘wow, that outcome is inevitable’. That’s when you fall in love.”

What’s hard is telling an entrepreneur they are just not loveable, says Reichert. Entrepreneurs have to show they are passionate about something, without saying it. “You have to see the rising curve of accomplishment.” It’s also about setting the right tone — the balance between confidence and humility. “Investors hate arrogance because they think that’s confidence carried to a level of inflexibility, and that’s risky.

“But humility means openness to ideas and reality, and that’s something investors want.”