Make Investors Sit up and Notice #7 – The Sandwich Strategy

Sandwich Strategy - by IntelliversityMake Investors Sit up and Notice #7 – The Sandwich Strategy

First, credit where credit is due:  This term, the “The Sandwich Strategy” comes from George Kenney, co-founder of VC Shepherd Ventures and founder of the Entrepreneur’$ Bootcamp.  Let me say something before we go on. When a successful venture capitalist tells you what affects his decision to place his funds, it’s time to sit up and listen.

The Sandwich Strategy. What is George talking about?

Hint:  Prior to Intelliversity, George had accumulated extensive real-world evidence that the qualities of a company’s CEO and executive team account for most of the variance in business results of start-ups and emerging growth companies.  He’s able to demonstrate the truth of that statement by tracking the performance of his own 18 venture-backed companies and in an additional 18 participants in his Entrepreneur’$ Bootcamp.  The Sandwich Strategy is one theory, though still speculative, about how to organize a company’s team with strong promise for business success.

As I’ve so often asserted, if a trait of the CEO or leadership team shows promise for business success, that very same trait shows promise for raising capital, IF YOU KNOW HOW TO EXPLAIN IT TO INVESTORS.  So the purpose of this post is:

  1. To invite you to try the Sandwich Strategy
  2. To explain to your investor candidates how and why you’re doing it.  There’s a lot of value packed into this one post

George observed he became fully convinced of the value of the Sandwich Strategy when observing in retrospect the most successful companies in the Shepherd Ventures portfolio.  One in particular illustrated a “full sandwich” and several others were examples of an “open face sandwich.”  The “full sandwich” is described here:

Company X was at the time of its acquisition the leading supplier of a specific category electronic devices for industrial and OEM applications.  It was sold to a larger company five years after a series A investment for well more than $50M.  This was a significant win for its investors.  There were many reasons why Company X was a solid investment and many reasons for its success, but the following stand out:

Mr. A was CEO and a co-founder of the Company.  Prior to co-founding Company X, Mr. A was successful as an executive in two companies offering a similar product line but serving a different market segment.

Mr. B was President and a co-founder of the Company.  In prior positions, he was an executive for the same companies as Mr. A in a senior supporting role.

The Chairman of the Board was Mr. C, previously a three-time successful CEO.  Mr. C represented investors by taking this position on the board.  In this role, Mr. C advised the investors as well as advised the management of Company X.  In this role, as a previously successful CEO, Mr. C was accurately described as a mentor for the CEO.

So where’s the sandwich?

Mr. A was the “meat.”  He had the most difficult job of both steering the company in the direction of its vision AND instilling the company’s culture (more about this in a subsequent post.)  He’s the leader I have elsewhere referred to as the “Vision Master.”

Supporting and stabilizing the Vision Master CEO was the Execution Master – in this case Mr. B.  Closer investigation reveals that Mr. B did, in fact, share many of the attributes of Execution Master, while Mr. A did, in fact, share many of the attributes of a typical “Vision Master” –  disrupting an industry – though far more grounded in reality than many first-time CEO’s seem to be.

As you may have concluded, the sandwich is completed in this case by Mr. C, the mentor, and Chairman.  With little operational role, his job was nevertheless more than an occasional advisor.  His greatest value was to keep the rest of the sandwich from falling apart when under stress.  How this invisible role was actually carried out in practice, whether in confidential board meetings or in one-on-one conversations with the CEO and president is left to your imagination.

There’s a reason why sandwiches work.  Yes, there are different ways to serve up meat, but the Earl of Sandwich’s idea certainly takes the cake.  The two layers of stability (Execution Master and Mentor) on the outside allow for considerable innovation in the middle without loss of stability or integrity.

Key Takeaway:  Try the Sandwich Strategy of successful executive teams.  As Vision Master, surround yourself both by an Execution Master who you trust completely to “have your back,” someone who thinks defensively and is process-oriented, compensating for your disruptive nature, preferably with prior experience working together with you, and a mentor with sufficient maturity so that you trust him/her to guide you through stressful times.  THEN, become a master at explaining to investor candidates how and why you’ve done this.  This will create trust in your ability to carry out the plan, increasing the likelihood of a second meeting and getting a check.

Born to Star - Sandwich StrategyTo read more about the power of the Vision Master and the Execution Master download my eBook, Born to Star – Secrets to Business Funding Success. Get your complimentary copy from our library.