Over the five years of building Kite Ventures, there are several things at which we’ve failed.
For one, we started with an idea of building a big name in the venture capital space, but never actually built a fund. We built an investment company, not something with a traditional LP/GP relationship. There is no “committed” capital, but also no strings attached. We have over a dozen investment partners that join Kite on a deal-by-deal basis and don’t pay management fees on the invested capital. There is only a profit-sharing arrangement. Since we don’t have management fees, there is no expensive office, no private jets (we fly coach), nor a multitude of assistants and associates. I am neither complaining nor boasting, just stating the facts. We have invested over $250,000,000 into some of the most successful companies in Europe (including Delivery Hero, Auctionata, Tradeshift, Fyber and Made.com), as well as some great ones in NYC (Plated and Merchantry), have build a good reputation, assembled a solid investor base, and are growing quite nicely with the help and support of our investment partners and the entrepreneurs we’ve backed (some of whom have also become our investors). We anticipate for the next five years to be more productive and rewarding than the previous five.
Even though this is a successful outcome, we failed at the initial goals we’ve set.
A “No-Meeting” Culture
Another failure was not being able to build a culture of weekly meetings. I tried a number of approaches. Sending out calendar invites worked for a week or two after the invites were sent out. But meeting yielded no results and all participants started quickly coming up with excuses not to attend. After all, what do we do at these meetings? Report? Listen to reports? Kite has a small team, so all communications happen in real-time. Everyone is motivated and driven to achieve as much as they can. Ultimately, we realized that we didn’t need the weekly meetings and it’s unlikely that we’ll have them in the future.
It was only recently that I realized that not building a proper fund and not having weekly meeting are just two facets of the same coin. I regretted not having these two structural components in place, but it turned out that it’s simply more efficient without them.
A More Efficient Company
We provide a desirable product for investors by aligning interests on returns and not charging management fees. In doing so, we truly treat both investors and entrepreneurs as partners: both help us make better decisions and, in turn, run a more transparent and successful investment company.
By not having weekly meetings and empowering our small team to focus on key tasks at hand, we also run a more efficient and productive organization. My favorite Peter Drucker quote sums it up:
“In the knowledge economy, everyone is a volunteer, and we are trained to manage conscripts.”
That’s what management meetings are about: managing conscripts. You come to the meeting because you have to. You are there to “manage” or to “be managed”. That’s exactly what we don’t want to do.
There are no benefits to treating employees as conscripts. Drucker also said that “management is doing things right; leadership is doing the right things.” For us, the right things are not management or reporting, but work and results.
Better communication with all stakeholders
By the way, since we don’t really have LPs, we don’t have LP meetings either and communicate with our investment partners in a more open, real-time manner. We see everyone around us — entrepreneurs, employees and investors — as a part of the same team. We all aim to build great companies and see promising people grow in their jobs.
Of course, it’s not awesome to fail, but sometimes failing in details makes you succeed in greater things.
P.S. Management meetings really suck and I’m glad to see us moving towards a meeting-free world. It’s exciting to be involved in building this happier future.