Talking With Giants: Ben Narasin’s Advice On What To Look For In A Startup (Part 1)

Ben Narasin is a Venture Partner at New Enterprise Associates (NEA), A VC based in Silicon Valley. He was an entrepreneur for 25 years and is a highly respected early-stage investor with a portfolio of companies in fintech, digital marketplaces, mobile and connected devices. I had the privilege of working with him to build Vungle, as he invested early in my company, which eventually sold in 2019 for $780MM. I sat down with him recently to get some advice as I move forward in my own career as a VC. We talked about a wide range of topics, including what he looks for when he is considering investing in a company.

Evaluating Whether to Invest in a Particular Company or Not

When I asked what he looks for in a potential investment, Ben explained, “I need five things to make an investment:

1. People
2. People
3. People
4. A great idea
5. A huge market”

That evaluation criteria allowed him to be open to many different sectors. “Lending Club was fintech. Dropcam was hardware. [Vungle was] ad tech. I invested in a company in health tech called Humana Health. I invested in a security company called Cloud Passage. Now, as a VC, I can’t do all those categories. But what I’ve basically said is, I will look at any category except security and med-tech because those require very specific domain expertise. I’ve always centered on one thing: entrepreneurs that make me say, “Wow.””

The Secret to Any Entrepreneurial Success

Ben was reminiscing about a time in Vungle’s history when things were really difficult, and he and I had a conversation about how best to proceed. He related it to his explanation of the success of the entrepreneurs he has worked with in this manner: “My way of investing is very human-centric. I want to really believe in the people because I think tenacity is the number one secret to entrepreneurial success.” Addressing me, he said, “You know how hard it is. You had a moment where you saw that it was going to take a lot longer than you thought. We had that conversation. Like you had to push through some really difficult times. You could have sold the company and done all right, but it wouldn’t have been anything close to now, right? So, you know how hard that is. There are entrepreneurs, and there are entrepreneurs. The difference is huge…. When I met you, I mean, man, you felt like you were fresh out of school, bright-eyed, and bushy-tailed, and energetic and had this great idea. And it was trending pretty well. But, I mean, you might as well have been a teenager relative to sort of where life had taken you then, and now you’ve gone through and you’ve learned all that.”

He continued, “I always want to remember just how hard all that is. And that’s why the people are so important, because a great idea with the wrong people [doesn’t work]… it has to be a phenomenal idea and the perfect place, the perfect time. And then sometimes it can work. But usually, it doesn’t because if someone’s willing to give up, they’re going to, and if they give up, you lose all your money (or most of it). So, the people [part of the equation] is critical to me.

Red flags

Ben pointed out some potential red flags when working with entrepreneurs, such as those who don’t accept offered assistance. Another red flag would be any entrepreneur who is looking for very frequent advice, perhaps weekly. He explained “I had an entrepreneur. I told him how my process was. I have to see you once a quarter. And he said, ‘I’d rather see you more often. Could we meet once a week?’ And I was like, ‘Oh, I’m so gratified. This guy wants my advice.’ What I should have thought is, ‘Uh, oh. Why do you need to meet me once a week? You have that much to learn?’ Everybody has a lot to learn, but once a week? So, I did do it, and it might have been viable for it to have been useful, but it became clear pretty quickly that it wasn’t going to be.”

He also talked about entrepreneurs who delay action in order to get buy-in or feedback from an investor. He gave an example of an entrepreneur who did this, describing the situation this way: “He asked for advice on X, and I said, “Well, it’s your decision, but I can tell you from my experience, I’ve had success with this and you might want to think about this and all that.” And I left. And the next week comes along, and he said, “Take a look at what we did.” I said, “What do you mean?” He said, “Well, this is from the advice you gave me” (Understand, this was a proposal to a client!). I said, “You didn’t send that out last week?” It was like, “Dude, your thing exactly as it was last week is better than the perfect document this week. You just gave up a week! How can you give up a week in a sales cycle?”

Another time, an entrepreneur simply turned to Ben to ‘rubber stamp’ his decisions. Ben makes it a point not to tell any entrepreneur what to do; instead, he provides perspective from his experiences. For one entrepreneur in particular, he felt he needed to be firmer in his stance. He explained, “I don’t say what somebody should do. I try to tell stories of my own experiences to illustrate why it might not be a good option. This was the only time ever after 58 minutes of storytelling, I said, ‘I have never said ‘no’ to an entrepreneur, but you cannot do this. You will kill the company.’

And he looked at me and said, ‘Ben, I really appreciate your advice. I’m going to take that back to the team, but we’ve already done it.’ …. At that point, I realized I can’t help this person. They’re not going to come to me with things they want answers to. They’re going to come to me with the answers they’ve already created, and they’re just going to want me to rubber-stamp them. And by the way, that did effectively kill the company. So, we did have a couple more calls before the company died.”

My interview with Ben covered a multitude of topics. If you’d like to read the other topics we discussed, you can read them here:

You can watch the whole video interview here:

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