People and Outsourcing

In the latest issue of Harvard Business Review, a classic article was replublished by Devid J. Collins and Cynthia A. Montgomery: "Competing on Resources." In the article the authors explain the essential elements of resource-based view (RBV). The authors should be applauded for introducing a lens that builds on internal and external analysis, rather than introducing a new, insulated concept. While we at the Newport Venture Group, LLC encapsulate such elements in our screening model, we feel that two important concepts be recognized: people and outsourcing.

1) People: Most have heard of the three most imperative factors in real estate: location, location, location. In the world of venture finance, we have a three factor guide, as well: people, people, people.

Although some strategic elements fail to translate into the world of new ventures, situational analysis still serves as an influential foundation for success. The article cites many other forms of resources; however, the most important resource of all—people—seems to receive less recognition.

2) Outsourcing: This concept may surprise you. As its meaning conjures up thoughts counter to emphasizing the importance of ‘people.’ However, more today than ever, I see some of the most talented individuals in an organization focusing on the least important tasks. A leaner, more efficient organization is on the horizon. This organization is founded on outsourcing. The large corporations with call centers will not be the only ones adopting the trend. Startups, boutique firms and midsize firms must eventually harness the trend.

I see startups today “bootstrap” in a whole new way. They have their star employees dissect critical problems while having a virtual team of MBA’s from India simultaneously focusing on basic work flow at a rate of less than $12/hour. With revolutionary outsource platforms such as ODesk.com, which allows anyone (individuals, consultants and small businesses) to hire, recruit and train a worldwide team, one may see a shift in how resources are managed.

Those two concepts aside, I feel that RBV still holds true today. Yet the prevalence of the global environment must galvanize one to adjust the lens to which they view strategy, whether it is at the corporate level, or embryonic level.

About the Author

Randy Komisar stands as one of the most well-respected and intriguing venture capitalists in Silicon Valley. Randy is a partner at Kleiner Perkins Caufield & Beyers (KPCB), arguably the most dominant firm in the history of venture capital. Their humble portfolio includes: Google, Sun Microsystems, Elance, Electronic Arts (plus a lot more).