The “Least Worst,” General Catalyst’s Two-for-One Sale, Turning Your Umbrella Upside Down, and Other Gems From Xconomy’s Star-Studded Venture Panel

Robert Buderi7/7/09Comments (2)Follow @bbuderi

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(tongue in cheek, just in case you can’t tell) his own plan for innovating in venture: a sale on the bottom quartile of General Catalyst’s portfolio. “Buy one, get one free,” he said. “I think it’s novel.”

Great opportunities to recruit talent in the current climate

On a serious note, Cutler pointed out that the economy has meant that there is a lot of great talent out there looking for work—talent that would either have gone to a “safe” job at a big company, or even founded its own startup, in better times. That makes it a potential great time for startups to hire top talent they might not normally attract. “If I was an entrepreneur, I would be trolling for the smartest young kids to come to work for me,” he said.

On Greylock moving its HQ to the West Coast after 44 years in the Boston area

“A non-event,” was the pronouncement from Greeley.

Cutler seemed to agree, pointing out that Greylock’s center of gravity had long been shifting west, as older partners here retired or cut back on their activity and their younger colleagues got busier in the Valley. “It has nothing to do with the quality of work” in Boston, he told the audience.

On what’s hot

Greeley asked about what investment areas are hot in the current climate. That elicited a range of responses:

—”I wouldn’t tell you if I knew,” said Afeyan.

—Healthcare IT, said Higgins. “It’s the only way out of the woods in healthcare.”

—Cutler went back to his earlier point about the chance to hire top young talent. “The most exciting thing for me personally is that young kids can’t find jobs easily.”

—Paley said his new fund will try to invest in what isn’t hot, but still presents a good business opportunity. He gave the example of Brontes Technologies, a company he co-founded before Founder Collective and ultimately sold to 3M. Brontes was a high-tech company in dentistry, a sector few venture firms were interested in—yet it ultimately proved very successful. “That’s what we look for,” Paley said.

On going after government stimulus funding

The federal government, most notably the National Institutes of Health and the Department of Energy, are not great sources of funding for entrepreneurs and startups these days, said Afeyan. That’s because they tend to favor the “well endowed,” meaning big companies that are more proven and therefore less risky for them to fund. “I’m a little worried that the money is not going to trickle down [to the startups] where innovation is already happening,” he said.

Cutler agreed with Afeyan generally, especially about startups, but pointed out that a mid-stage company in a relevant sector for government stimulus funding can really benefit from the low-cost capital that stimulus funds might offer. If he were at such a company, “I would get people who know how to talk to government and get that money,” he said. “While it’s raining, I would turn my umbrella upside down and try to catch as much as I can.”

Go for it!

Tango provided one last bit of advice: go for it. There is a natural mentality of not wanting to fail, he said, especially in these times. But having the courage to take a chance, or, alternatively to shut things down if they aren’t working, is key to success. On follow up, he said in an e-mail, “I think fear hobbles entrepreneurial thinking in 2 ways: first, people don’t dream enough and settle for 2nd best; and second, they worry about a failure and get stuck in an opportunity that never could be big.”

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926, or follow him on Twitter at http://twitter.com/bbuderi.