I’ve known Mike since 2006 when he was a partner at Panorama Capital. I was at SVB and responsible for the relationship with Mike’s firm. He and I often spoke about how the startup landscape was changing and, by definition, how venture capital was changing, too. Companies were staying private longer, needed less capital to get to product-market fit, and were growing faster than we had witnessed in the prior decade. He was all too familiar with this dynamic and its downsides.
Mike experienced it first hand when he ran corporate strategy and business development at Ask.com. He joined when it was still a private company and helped drive it through to a successful IPO in 1999. Having architected distribution deals like GoTo.com and acquisitions like Direct Hit, Mike was most always locked up from ever selling shares. So when the dotcom bubble burst, he ended up owing far more in taxes than his shares would ever be worth.
Another example was during Mike’s tenure at JPMorgan Partners (the predecessor to Panorama), one of the first investments he led traveled quite a bumpy road. Like most startups, the path to success was far from a linear one. Years on, the company found its stride in transforming a generations-old industry with a new approach. Having proven the business model and now aggressively scaling the business, the founding team sought some liquidity as part of the financing when Mike invested. However, that conversation was equally bumpy around the JPMP table. The prevailing thinking among VCs then was: “Why are we putting money in while they’re taking money out?”
In reality, neither the founder nor his team were trying to “cash out.” They were simply looking to solve for their particular personal situations. In the founder’s case, he had imposed upon himself a meager salary ever since the company’s founding. He was seeking to provide his family with a little financial security, to make that distraction go away and to get back to focusing on long-term company building.