VC Wisdom for SeedHive: A Conversation with Kurt Hawks

6 Aug

Monitor Ventures

In order to determine whether my business concept, SeedHive (a social network for entrepreneurs), really has the potential to be successful, I must start with the question “what does this site provide for each of [my] target audiences?” This was the simple, but sage advice of Kurt Hawks, a former colleague from Monitor Group, working at Monitor Ventures, and now VP of Operations at Greystripe.

About two weeks ago, Kurt generously agreed to speak with me about the SeedHive concept, providing critique and advice from the perspective of a venture capitalist. He was, in effect, the first of my three target audiences with whom I would need to test the idea: entrepreneurs, venture capitalists, and service providers offering goods and services tailored to these businesses.

From our conversation, I believe SeedHive would benefit venture capitalists in three significant ways:

  • Information: The aggregation of news, data, and trends which are today disparate and inconsistent, into an intelligent, reliable news source
  • Sourcing: Simplifying the identification of both new business ideas which might be attractive investments and entrepreneurs with whom they would like to do business
  • Networking: Facilitating the face-to-face networking that is the mainstay method of interaction within the world of entrepreneurship, and providing a viable (if ultimately less desirable) alternative

He validated each of these needs, and helped me better understand how VCs work and think.

Concerns:

Kurt did, however, bring up some concerns about SeedHive which reiterated critique I have received from other thought partners. Will people really be willing to share a significant amount of detail on the business plans they are developing? How will the site attract the critical first adopters who will begin to create content for the site?

One of the areas where Kurt helped push my thinking was related to the integration of a provider network into the site, particularly one which has users voting and rating each vendor’s quality. First off, he confirmed that the real need (which he has already experienced at Greystripe) is for entrepreneurs to be able to find pre-qualified vendors and providers they can trust without being able to call upon the long experience or deep pockets of larger firms. The more information potential buyers have about a vendor, the better.

Nevertheless, in order to get providers to engage with the site and pay to list their services and products in any sort of SeedHive marketplace, providers will need to be comfortable that the reviews they might receive would be honest and fair. Just like eBay, where a merchant score is crucial to winning business, providers will recognize that a few unfair reviews could seriously hurt their ability to do business. He pointed to LinkedIn as an example of a site which has attempted to balance vendor control with user ratings.

What Now?

Coming out of the conversation with Kurt, I felt both energized and appropriately hesitant. There are clearly a number of other organizations working in very similar, related areas, and in many cases, their business models are much clearer and more focused than that of SeedHive. PartnerUp, for instance, is an intelligent solution to the need for entrepreneurs to find potential business partners with appropriate skills and experience. The Go Big Network has created a showroom for investors to easy find businesses looking to raise capital.

The next steps will be to continue to investigate the other businesses and individuals who are playing in this same space, continue refining the business idea, and most importantly, creating a financial model. Kurt posed the question quite simply as “how many people do you need to generate a profit?” How many users? How many advertisers? Paying how much? They are simple questions, but ones which I must answer honestly before I move too far ahead with the idea.

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