We also asked O’Malley — who was recruited into Accel from Battery Partners in 2013 — what it was like to transition between the heavyweight firms, and what he views as the biggest differences between them.
More from that candid chat follows. Our conversation has been edited lightly for length.
TC: Founders sometimes feel “orphaned” when a cherished VC board member leaves to start his or her own fund or, in rarer cases, is recruited into a new firm. What happened to your portfolio companies when you changed firms?
BO: The simplest way to look at [these transitions] is that with the money comes the board seat, and the money is from the firm, not from Brian. So at the end of the day, it’s the firm’s call about whether you stay or go.
Sameer [Gandhi], who recruited me in, had [been recruited into Accel from Sequoia Partners back in 2008] and gone through a similar process, so I think there was a general attitude of: “Look, your entrepreneur relationships are the one thing you take with you, and your reputation is all you have, so let’s err on the side of doing right by the teams you’ve backed.” The thinking was, “If it takes these startups a year to get things figured out, that’s okay. At the end of the day, they chose Battery to work with you, and it’s kind of not fair [to abruptly end those ties].”
TC: What did Battery think?
As things played out, for simplicity’s sake, the Battery guys wanted to make sure they had someone involved sooner rather than later. And so some of the board transitions happened sooner than expected, and I just ended up doing more [work with the startups] on the side. It was weird, because you go from this formal person where you’re the Series A board member to this person who the [founder] reviews the deck with before the board meeting. A lot of founders can get caught in the middle, where they don’t have any [say in the matter], so it was nice to overlap a bit.
The Battery guys were very mindful, too. A lot of them didn’t have a lot of board capacity but they stepped up and took over for me.
BO: HotelTonight was the easiest. Accel and Battery were both involved from the seed round and both kind of co-led the Series A , so each firm had one board seat already and Accel’s seat was Theresia [Gouw’s] , who was leaving to start her own fund. So it was natural that I would switch over to the Accel board seat.
Sprig and Duetto were more complicated. Sprig’s Series A was coming up right as I was transitioning over [to Accel]. It ended up that Greylock led the Series A but Accel and Battery both participated in the A [round] to continue that relationship. With Duetto, we sort of preempted the Series B, with me leading [its] B [round] about four or five months after I came over to Accel. [Editor’s note: With O’Malley as point person, Battery had joined Duetto’s seed round and led its Series A.]
TC: Switching firms, what was harder than you expected, and what was easier?
BO: I’m not sure anything was easier [laughs]. One is obviously understanding the firm and its reputation with entrepreneurs, as well as with limited partners, because sometimes there are buried bodies there that you might not realize.
You also want to understand the relationship that entrepreneurs have with partners from that firm. Are they the first call, or are they along for the ride?
Then obviously you want there to be chemistry with the people that you’re working with.
Another thing I researched was how decision-making worked, because I wanted to make sure if I was going somewhere, it was somewhere where I’d get input from the group but not a place where people are formally voting or there’s a setup where, at the end of the day, some patriarch has final say on every investment.
TC: How did things work at Battery?
A lot of Battery investments I did, the ones that were the best performers, were frequently the most controversial. At Battery, you got input from the broader group, but at the end of the day it was your call. I wanted to ensure there was a similar ability [at Accel] to stick your neck out and try to make the right call.
TC: What didn’t you research and wish you had?
BO: Things I didn’t research and would advise someone to do is to try understanding the history of why things are the certain way. When you think about a firm’s character, there’s a lot of pattern recognition and muscle memory that goes into it. So my assumption coming over from Battery was that I’d keep doing what I’d been doing, since things had gone well there. The reality is that different firms have a different chemistry and different goals, and you need to understand what types of investments will resonate with the crew.
TC: Can you be more specific?
BO: Accel is naturally more risk-seeking. It’s trying to find companies that have the potential to be break-out winners. Battery is a little more risk-averse; there’s more thought going into this concept of dollar-weighted mortality. [You’re always asking] what percent of your dollars are going to go to zero, and so what do you need to get from your winners.
It takes time to figure out how to position yourself to be successful the way the new firm defines success versus how you found success historically.
TC: Do both firms have apprenticeship models? You came up through Battery as an associate.
BO: Yes. If you look at the partners around the table [at Accel], a lot of them started out as principals. Accel maybe catches people a little bit further down the path, so instead of being in your mid 20s, you’re more likely to be in your late 20s, early 30s, so you get recruited in with more experience. But both are set up with the idea that the best partners will grow through the ranks of the firm. In fact, it’s really just Sameer and me that have come from outside. And at Battery, it’s also just two people [working for the firm] from the outside. At both firms, the majority [of their VCs] work their way through the ranks.
TC: What interests Accel that wouldn’t interest Battery, and vice versa?
BO: There are two things we look at [at Accel]. One is purely a financial return and two, we want to be the primary relationship with the entrepreneur. We want to be that first call at 11 o’clock at night. So there are things that come across our desk and you can see that, “Hey, this could be a good money-making opportunity.” But that’s really not our core business, and that’s been one of the lessons for me joining Accel. At Battery, you would look at things and, risk-adjusted, you’d say, “Hey, this is a good yield,” and that was ultimately the final filter. It was: Are we going to make money on this thing?
Here, we look at things through that lens but we also want to be one of the top firms, not just today, but 10, 20, 30 years down the road. And the way you do that is by being the lead investor in really transformative businesses. Piling on later isn’t something we do.
It’s hard, because you look at some of these companies, you look at the people who invested in Snapchat or Twitter, and a lot of times, it’s easy money because the company is already doing it’s thing. But I didn’t get into venture to work in finance.