Be selective about the people you take advice from and the people who join your team. Not all ideas are created equal, and not everyone should be part of what you’re doing.
Adam Root is a founding partner at Tricent Capital, a venture capital firm based in San Francisco, California, that makes data-driven investments to deliver frequent, consistent, and rapid returns for investors while creating life-changing economic events for founders.
Formerly the co-founder, CTO, and COO at SocialCentiv, Adam supports Tricent’s portfolio companies by mentoring executive teams on software engineering, user experience (UX), marketing, sales, and customer service.
Where did the idea for Tricent Capital come from?
Following an unpleasant experience raising capital for SocialCentiv, my previous company, I decided to go into venture capital. My co-founder and wife left me during the fundraising stage, and I’ve heard similar horror stories from friends.
Only later, though, did I learn the true scope of the problem. According to Harvard Business Review, 50 percent of founders are no longer the CEO at their ventures by year three; by year four, that figure drops to 40 percent. Upon reaching the IPO stage, just 25 percent of founders are leading their companies.
When launching Tricent Capital, I hoped to create a win-win VC firm. I dreamed of delivering consistent returns for limited partners while creating life-changing financial events for founders.
What does your typical day look like, and how do you make it productive?
My day starts early. I wake up, eat breakfast, and go to the gym. After my workout, I shower, get dressed, and walk 5 miles on the Embarcadero to Tricent’s office.
Once I arrive, I hear a few pitches from startup founders who are looking for investments. Then, because Tricent is a continuous fund, my afternoons are devoted to raising capital. I meet with limited partners and other high net worth individuals, and I pitch our fund to various investors.
In the evenings, I can be found writing memos and updates for our investors, stakeholders, and operational partners. My late evenings are typically spent entertaining investors, founders, or both.
How do you bring ideas to life?
I’m a collaborator. When working on a project, I gather smart people — either at Tricent’s office or remotely — to brainstorm. After whittling ideas down to an actionable plan, we’ll test in the market.
Brian Botch, my founding partner, and I know the importance of user experience, and we spent a year earning the Nielsen Norman Group UX Master Certification. We employ those techniques every day to improve our holdings’ user experiences, as well as our own.
What’s one trend that really excites you?
I view pitching to investors as a dying art, and I couldn’t be happier to be part of that trend. In the future, rather than share a pitch deck, startups will share Google Analytics, Stripe, and Xero accounting files with VCs. They’ll use data — not bullshit — to share their stories.
Today, many startups don’t receive funding because they simply don’t have the right networks, and I think that’s a shame. If someone, well-connected or not, has a good idea that’s getting traction in the market, he deserves to be heard. That’s the idea behind fundable.it, a website that my partner and I created to enable any startup to be assessed by our Fundability Score — no introduction necessary.
What is one habit of yours that makes you more productive as an entrepreneur?
I’m all about the hustle. Every day, I’m selling investors on why they should commit capital to our fund, founders on why they should take our capital, or potential team members on why they should join us or one of our partners.
What advice would you give your younger self?
Be selective about the people you take advice from and the people who join your team. Not all ideas are created equal, and not everyone should be part of what you’re doing.
If you’re on the fence about someone, ask yourself, “If my organization was worth $100 million today, would I hire this person?” If the answer to that question is no, keep looking.
Tell us something that’s true that almost nobody agrees with you on.
Investing in unicorns is a waste of time. Venture capital funds are structured to invest in home runs — companies that will, one day, be worth a billion dollars or more. Unfortunately, most investors are shortchanged by this approach. In fact, most VCs know that out of 100 investment companies, 90 or more are going bankrupt, and one company may drive returns for the entire fund.
The result is that founders are pushed beyond their limits, limited partners lose their money, and VCs lose their reputations. It’s a lose-lose-lose situation, but that’s how most VCs operate because it’s easy to maintain the status quo.
As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?
Every day, I have four priorities: work out, eat right, work my ass off, and have fun. Each morning, I go to the gym and walk to work. I fuel my body with protein and healthy foods, work 10 hours per day, and then relax with drinks and friends at night.
What is one strategy that has helped you grow your business? Please explain how.
I’m a big fan of the five-minute favor. It’s a simple way to help others, but small acts of kindness can work wonders. That sometimes means making an introduction, sharing an article, or just taking someone out for a drink.
Even when I’m busy, I make time for such favors. The results may not be immediate, but — believe me — dividends will show down the road. Stick with it.
What is one failure you had as an entrepreneur, and how did you overcome it?
Being an entrepreneur means being a failure, so I’ve had my share. Maybe my greatest failing was losing sight of the company’s purpose at SocialCentiv, which I shared in Inc. I’d prefer to describe failing as learning, though, because of the unfortunate taboo associated with failure.
What is one business idea that you’re willing to give away to our readers?
Tricent’s key sectors are social, mobile, analytics, and cloud (SMAC), so I spend a lot of time thinking about analytics and data. One day, I had an idea for a dating app that would analyze your message open rate, response rate, and more. Then, a cloud-based CRM would help keep track of communications. Think of it as Salesforce for dating.
What is the best $100 you recently spent? What and why?
I recently spent $100 on a subscription to Optimal Workshop. The tool allows UX professionals and product designers to improve the usability of their applications by testing them with real users. To see if potential investment companies have achieved product-market fit, I use the app to conduct qualitative and quantitative audience research.
What is one piece of software or a web service that helps you be productive? How do you use it?
I love RescueTime and x.ai. RescueTime analyzes how I spend my time around the office. It, for instance, logs that I spent about two hours researching online for this post. x.ai helps me effortlessly schedule meetings.
What is the one book that you recommend our community should read and why?
Every founder looking to raise money should read “Raising Capital” by Andrew Sherman. The book gives a detailed look into how founders can raise startup funds and where they can look beyond traditional sources.
What is your favorite quote?
In “The Guardian,” Kevin Costner’s character says, “There will come a time where you will reach the point of exhaustion and you will want to give up. The question is…will you?”
Connect:
Adam Root on Twitter: @adamroot
Adam Root on LinkedIn: www.linkedin.com/in/adammroot
Mario Schulzke is the Founder of ideamensch, which he started a decade ago to learn from entrepreneurs and give them a platform for their ideas.