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KEEPING UP: 115 interviews in the archives
Interview: Richard Plumridge (2/2)
by Nettie Hartsock, June 2001
Interview Navigator:
[Part 1] [Part 2]

Part 2: Success and competition in the marketplace

Talking about human nature, how important to a prospective VC is the entrepreneur's willingness to succeed no matter what?
It's absolutely important. The personal chemistry and the enthusiasm of the entrepreneur for the idea are very important. The venture capitalists know the company is going to go through rough times and they want to know that the CEO is going to be able to succeed.

They want to see the kind of person that says, "I'm not going to fail no matter what. I know I have challenges but I'm just not going to fail." It's nice if they've got fifteen years of experience in the field, etc. but when you marry both the enthusiasm and the experience, that's ideal.

To be able to see that, is part of what the venture capitalists get paid to do. The best venture capitalists are the ones who judge the people and the market the best.

You made an interesting note in the forum in regard to competition, and how because of the downturn, competitors are less numerous. Can you talk about that?
Sure, for awhile there you heard people talk about the next big thing. What would happen is in a B2B play, you would have people saying, "We're going to have a marketplace for trading Caterpillar tractors or whatever it might be. And then you have 28 folks out there all going for the same space, who all get heavy funding and they got huge amounts of money to build their brand etc.

And what it basically does is just confuse the customers, it's harder to sell and it fragments the market.

The good news now is if you have a really good idea, there will be fewer companies to fund it and there will be fewer competitors. So you have a higher chance of success if it's a real product that is going to add value to your customers.

And the key has to be value added?
Absolutely. The Internet is very good at what it is good at doing. The Internet is a very cheap way to real-time reach a lot of people. It's a device that can ubiquitously contact people all over the world very efficiently and very cost-effectively.

There was this myth that the Internet was a magic wand. It's not a magic wand, it's an incredible tool, but if what it does is not going to help your business make a profit, then it doesn't matter. If you look at toys, ToysRUs for example, obviously you can't at this point sell enough toys over the Internet to make a profit.

Now somewhere along the line, 50% of the toys are going to get sold over the Internet. But it will be as the marketing techniques become more finite and polished. People will figure out what's the right blend between a bricks and mortar store and a clicks and mortar store. And ultimately they will figure out what the Internet will and won't do.

Part of the hysteria in the last couple of years was that belief that the Internet is magic. And it's just not the case. The smart entrepreneurs and the smart venture capitalists ask, "Will the Internet enable me to do this?" whatever it is that you're doing.

And to you, what's the most exciting thing about the power of the Internet?
It's just an unbelievable device for communication and it does enable a whole bunch of businesses that just would not otherwise be possible. For instance, the whole email phenomenon, we couldn't survive without email in our offices, and the thought that you can communicate with just a few keystrokes almost instantaneously is just amazing.

Interview Navigator:
[Part 1] [Part 2]
Sponsor:
About this week's
interviewee:
Brobeck law firm is actively connected to venture capitalists and underwriters and provides an invaluable link to them for technology companies in many industries, including the Internet, telecommunications and software arenas. Mr. Plumridge is a much sought after commentator on the funding challenges, strategy and legal representation issues in the ecommerce and technology industry. We spoke in Denver, where he was a sponsor and featured panelist at the prestigious Start-Up Basecamp Conference.
Sponsor:
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