Paul O’Brien | Crain's Austin

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Paul O’Brien


1839 Ventures is an Austin-based venture capital firm that provides funding to high-potential technology-oriented companies. Using a thematic approach, it invests primarily in promising early to growth-stage Texas-based companies operating in commerce, communication and business intelligence.

The Mistake:

Underestimating the importance of having a team.

I started my career as a very egotistical, overly confident young internet professional. I taught myself how to build websites and was recruited to Yahoo. I was constantly bolstered with reassurances that I was doing the right thing.

Then in the early 2000s, when I was in my early 20s, I started my own e-commerce business from the ground up. I believed I could do it all myself, and did not have a team in place. I was a man unto himself and ultimately found myself dealing with $50,000 in credit card fraud. At the time, the laws weren’t clear with regard to interstate commerce and I wasn’t familiar with what could happen.

Because my work at Yahoo was in shopping, and I had previously worked in retail, I was certain that I knew the space and that nobody could teach me or reveal to me what I didn’t already know. I told myself, “Why do that for anybody else? Why not do that myself? Why not start my own business, take what I’ve learned and execute it?”

In e-commerce there’s a model referred to as drop shipping. I had acquired some inventory but most was owned and warehoused by someone somewhere else, and I was selling it and shipping it. A lot of e-commerce businesses practice that but what I didn’t understand then was that the credit card processing needs to be validated before you fulfill the order.

I was familiar with infrastructure, shipping, retail and e-commerce but I wasn’t as familiar with security issues. I didn’t understand needing a legal business structure for personal security to protect from liability. I was taking orders as they were placed and shipping them outright without confirming that the payment was legitimate. Today this is not as much of an issue because technology has advanced vastly and security is more sophisticated than before.

When I suddenly was processing a bunch of orders, I was ecstatic. I was getting more validation and assurance that I knew what I was doing. But weeks after that, the FBI called and said, “We think there’s a problem here.” After investigating it, there was no way to trace anything and I effectively lost $50,000 and my business closed within four months despite having some legitimate orders.

Now I understand that value of a team in business.

The Lesson:

It was a big shock personally and professionally but it didn’t turn me off of the industry. I left Yahoo not long after and started working for HP’s shopping business.

At the end of the day, I learned the hard way that what we learn in school and college about needing to be in teams isn’t quite the same because there you’re often stuck in teams with people you didn’t choose.

Now I understand the value of a team in business. At our firm, we’re diligent about building a diverse group of people in the firm so we can develop a fund. I’m very passionate about teams, and I’m an advocate of the idea that certain teams or makeup of teams can always get funded – that the right construct of a team is fundable.

I learned that a team is key to any business, firm or startup because they fill different gaps in an organization. Certain skill sets need supply. One person can’t do everything. That’s what investors and boards seek. They’re not seeking results or validation or traction so much as evidence that the people you work with are able to accomplish what you set out to do.


Follow 1839 Ventures on Twitter at @1839Ventures.

Pictured: Paul O’Brien | Photo courtesy of 1839 Ventures.

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