Eyal Lifshitz is CEO of BlueVine, a Palo Alto, California based company that provides business owners with lines of short term credit to cover their operating expenses between invoicing periods. Prior to BlueVine, he was a principal at Greylock IL (now 83North) and an associate at McKinsey.
Eyal holds an MBA from the University of Chicago’s Booth School of Business and degrees from Tel Aviv University.
I had the opportunity to work with Eyal at Greylock IL and recently got the chance to ask him a few questions about working in VC and founding his own startup.
Ilan Regenbaum: Do you think that there’s a best path for one to end up working in venture capital or are there a bunch of good ways to get into the industry?
Eyal Lifshitz: Well, I think that, first of all – just stepping back for a second – it’s very different to get into an investment, associate or analyst role, versus getting into a partner role. I’m assuming that you were asking about the former. Because it is a very different path.
I’ll start off and say that VCs are very heterogeneous. It’s not one thing. As opposed to, let’s say, consulting. Yes, there are obviously different firms, but they look for similar candidates, they have similar recruiting processes, they work kind of similar, and so on. VC is very different. Small firms, run very differently, with very different hypotheses and notions and different in recruiting. So each VC has different thoughts about what a professional position should look like and what kind of person would [work] for that role.
So, I’ll start off by saying that usually it’s really hard to convince a VC that they need an investment professional [like an analyst or associate]. It’s either they want it or they don’t. You can typically see if they have investment professionals. Some do and some don’t, [there are] just partners. You have to convince one that doesn’t have one to change their ways and get one.
If they usually have [a position for an analyst or associate] – I don’t want to say a cookie-cutter- but they have a profile that they’re looking for. What that means is that some like Ivys, some like MBAs, some don’t care about that. While some prefer that you have product managing experience, [others] prefer that you have an engineering background and, some don’t care. So I’m not trying to go around the question, but it really depends on the specific firm.
What I can probably tell you is that most firms are consistent. Meaning, when they have a certain profile in mind, that’s what they look for, that’s what they’ll continue to look for, and that’s what they like. So if you go to a certain firm and you see investment professionals from a certain profile, then it’s likely that they’re going to continue looking for people of a similar profile, unless somethings changes.
There’s different types of profiles that could help you get in. You certainly don’t see people looking for somebody that has no relevant experience, but there’s different approaches. Some VC firms like people that have consulting backgrounds, so that’s a good background to have. While others prefer that you have a top tier MBA. Usually the ones in Israel, for instance, like that you have a top tier MBA from abroad and some like that you have technology experience, and so on and so forth.
It’s hard to put a [finger] on it, but I could tell you that where I worked before, yes, they do like the fact that you come with an MBA, but they have many kinds of prerequisites. An MBA from abroad, and having international experience because high-tech is very international, even if you work in Israel. Ideally, it is good to have lived abroad or to have worked abroad. I would also say that part of it is networking – making sure you’re aware that an opportunity exists.
Not to discourage anybody, but it’s a hard role to plan for, because there are very limited opportunities there. It’s not like McKinsey where they hire I don’t know how many hundreds of people a year, there’s probably a thousand openings a year. And obviously lots of people want to get into the space. So a lot of people compete for it. And then it’s really about timing, being in the right place in the right time. And then finally, because all these VC firms are such small firms, chemistry is a big issue. When they select someone a lot of it is also based on how much chemistry they struck with the person.
So it’s really hard to plan on getting into the industry. It’s not like you can say, “Hey, I’m super smart. I’ll find an engineering job.” “I did my MBA, I’m super-qualified for consulting.” It doesn’t work like that in VC. Even if you’re the best qualified person to do this role, it’s really about, partially, luck and timing.
Ilan: Why did you leave venture capital to found your own startup, and how has your VC background helped you in your endeavor?
Eyal: It was really great being specifically in Greylock, it was a great experience and I learned a ton and the people there are amazing, so I didn’t leave because it wasn’t good for me there. My specific case is that I saw that there was an opportunity to do something very interesting in a space where I felt that I had the idea of what I wanted to do – the vision – and I felt that I could execute on it. So for me, it was more that I found a big opportunity to do something and I had the itch to go out and do. It wasn’t that I needed to leave or that I wasn’t enjoying my time there, or anything like that. It was just a matter that I saw an opportunity and I wanted to pursue. It was a really unique opportunity and a big one for me, personally.
When you go to work at a startup, from a VC there are couple things can help you make your transition into entrepreneurship. Obviously, you know a lot about the investing side, which as an entrepreneur there is a benefit there. Knowing how investors think, what they look for. It also helped me develop my own ideas. When I thought about doing something, it went through the critical lens of me as an investor. Suddenly I was, to some extent, doing this as an entrepreneur- but on the other hand, I’m also leveraging my inside and my ability to look at the idea critically and think whether this is an interesting idea and these are things I picked up being a VC.
The other thing is that when you work a lot with entrepreneurs, it’s exciting. You see what they’re going through. Obviously you are not exposed to it like they are –definitely not – but it’s exciting. You see a lot of VCs that get the itch to kind of cross the line and go back. As a VC you add value –definitely you add capital and some VCs add value, too – but at the end of the day, as a VC, you are not running the show. You are not running the business, you’re a trusted advisor, you’re a helper, you help with capital, you’re a good board member if you’re on the board, and so on. But you are not running the ship, you’re not steering the ship, and you’re not driving the business. You see people who haven’t done it, who have gone to venture capital at an early stage in their career, haven’t done [anything] entrepreneurial, and you suddenly get the itch to do it yourself, too. So that’s part of it and the other side is that I saw the opportunity and it was one of those things that I couldn’t look away.
Ilan: You are now based in Silicon Valley. Why the move, and what are biggest differences between being in Israel and the Valley?
Eyal: I think for me it wasn’t a question, I needed to be here. My partners and my market is here, and as a CEO of a company you need to be close to your market, partners, and potential partners. So it’s not even a question.
I think there are some industries or verticals where it’s OK to be in Israel as the executive management, but in our case, everything that is not R&D has to be here. We deal with our customers here, and at the end of the day, that’s the most important thing. I think there’s a benefit of having R&D in Israel, because I think engineering is very strong there, and product development too. And, while having an R&D center in Israel is beneficial for us, it’s also challenging managing it from California [with] a twelve hour difference.
I certainly miss Israel on a personal level, but on a commercial level there’s no doubt that you need to be here. For me, there’s also a matter of other things that I haven’t yet done a lot of, like when you start fundraising and so on, your investors want you to be close by. My current investors are international – they have presence both in Silicon Valley and in Israel. But as you raise more and more capital, your investor-base, especially if you’re successful, a lot of them would be in the Silicon Valley and would prefer you to be close by to them.
And it’s not that in Israel there’s no hot-bed of technology- there is- but it’s still not the Silicon Valley. And there’s no substitute – even though today the world is flat, it’s not a hundred percent true. When you want to speak to a partner or network and you’re in Israel and you need to pick up the phone or Skype – that’s not a substitute for picking up the phone and saying, “Hey, let’s meet for coffee downstairs tomorrow.” And that happens a lot [in the Valley]. Just the other week one of my VC’s made an intro to a potential partner who was traveling, and two days later I met him for coffee on University Avenue, two kilometers from our office. You don’t have that in Israel. It’s not close to your market. I think it’s different for some industries but for mine (fin-tech) it wasn’t a question.
I think we’re trying to benefit from both worlds with the fact that we have R&D in Israel, as it’s very hard to hire engineering talent in California. So, the fact that we have R&D in Israel is our way to benefit from both worlds. I think there are other places where there’s good talents in Israel, like online marketing, that we could tap into. But, if your target market is US consumers or even US small businesses or, I would argue also enterprise customers, you want to be in the US, at least on the business side.
Ilan: Now that you have the investment and the startup experience, are there any tips that have helped you get to where you are today that you want to share with budding entrepreneurs?
Eyal: To get an idea right, it takes a lot of time when you want to start something. There are a lot of iterations until you get to good product, market fit, and so on. I see, sometimes, entrepreneurs that are afraid to share their ideas because they think someone will steal them. I understand where it’s coming from, as I’ve had some unpleasant experiences with that in the past. But, at the end of the day it’s all about execution, and an idea doesn’t make the company. Any entrepreneur will tell you it’s really about how you execute. The idea you start off with always changes and morphs and so on. So my advice would be to speak with as my people as you can so that you can gain insight. You don’t have to leverage or act on every piece of advice you get, but the more points of information you get, the more it will get you thinking about things and learning more.
People should always try. They shouldn’t be afraid to fail. There’s a benefit to getting as much information as you can and doing as much research as you can when you start off. And I wouldn’t be concerned with thinking that someone is going to steal my idea. That’s something that you tend to hear more from people who are just getting into entrepreneurship who are scared of that. But it’s really not about the idea. It’s about the execution.