There was no business plan, not even scratchings on a cocktail napkin, Alberg said. But it went belly-up after a deal with Forbes magazine fell through. It may seem obvious now, but they learned early on that having a heavy stream of revenue is crucial to a start-up's survival. The team Madrona is much more sophisticated today, but it also has had to morph with the times. One key has been building an interlocking team of professionals with a range of age, technological expertise, finance specialties and entrepreneurial spirit.
Venture capital is a relationship business.
Everything is based on relationships - sourcing deals, evaluation, making decisions, and things ranging from how you can serve the company to introductions. Each hire brings not only expertise, but also credentials and Rolodexes that are, in some instances, more valuable than cash. Steven Anderson, who co-founded Viathan, which received funding from Madrona in early 1999, said he's seen Madrona transform from being clumsy with financials and legal documents to mastering the ropes. They understand the process much better today than two years ago. The talent brought on board includes Hirsch, whose primary job is to evaluate how companies in Madrona's portfolio can cross-pollinate and help each other.