Every time I evaluate a company for a potential investment, I ask the founders (and myself) tons of questions. Still, I think there is one question that is critical, and that needs to be answered in every startup company. The question is Why? Why did the founder(s) start this company?

There are many potential answers to the Why? question. “Make money”. “Be Famous”. “Make a difference”. “Prove something to myself”. “Prove something to someone else”. Maybe every entrepreneur has its own unique answer. There is no right or wrong here, but the true answer can have a huge impact on the end result.

One of my goals in the due diligence process is to answer this question (in the best way I can). Why? Because in the best cases, the motivation behind a company is aligned with our interest to invest in potentially long-term large scale businesses. In other words, hunger breeds results.

In his book Outliers, Malcolm Gladwell talks about the power of circumstance. He explains that Bill Gates and Bill Joy had unprecedented access to the earliest computers and, as a result, they built a couple of the most important computer companies in the history of computation. A quick look at the folks who graduated from law school with me at the dawn of the Internet age (it sounds so long ago when you put it that way) and you can see the power of circumstance at work again. In my law school class were four of the most well-respected Internet scholars: Professors Jonathan Zittrain, Yochai Benkler, Kevin Werbach and the Obama administration’s deputy CTO, Andrew McLaughlin. It is an impressive group of very thoughtful men and I consider myself lucky to have been in school with them and to continue to trade ideas with them from time to time.

For those of you who are interested in hearing what one of these experts is thinking about internet law, there is a great event taking place on Wednesday night (November 18th) at the Computer History Museum. Jonathan Zittrain will be giving a talk on “Minds for Sale,” followed by a reception. The event is being put on by the Berkman Center — Harvard’s center for the study of the Internet. I am a huge fan of the Berkman Center and occassionally am lucky enough to spend some time back east in their hallowed halls. There will be a fantastic group of folks at the event and it is open to the public. So if you are interested in meeting up with the friends of Berkman and hearing a great talk by Professor Zittrain, please come on by.

Last week I had an interesting call with one of the founder/CEOs in my portfolio. This is someone I highly trust, and I truly believe he has the potential to take his company all the way, from zero phase to a successful IPO.

During our conversation, we talked about the stage of the company: A working product, growing distribution, a good team, and some initial revenues. We both agreed that it’s time to take the company to the next stage. Leverage the existing foundation of the venture and build a real company: Roles & responsibilities, clear processes, scalable models. It’s time to graduate from elementary school to Junior High.

As the company grows, it’s also time for the CEO to change its title. No longer “founder & CEO”, but rather “CEO & Founder”. Think about it – at the early days of the business, the founder roles are the most critical: Being agile, identify quick opportunities, recruit fast, make unusual bets. At the second stage, it’s about professional management: all the structures I talked about before.

Not all founders can grow to become great CEOs. But I actually do think that many of the founders can make that leap. Maybe the first thing they need to do is to change their business card and embrace their CEO title.

Presented some slides on building teams to a room-full of very keen and enthusiastic audience at the TiE Institute session last week at London Business School on “Leading High Performance Teams“.. I tremendously enjoyed Adam’s slides and his exercises…Will share my own slides on this post later…

Since no one is really interested in interviewing me, I decided to do a self interview. This is my version of “self portrait”, especially since I can’t draw (or sing. or dance. Shows something about the qualities of VCs)

Why haven’t you blogged for since mid September?

Can’t really say. For some reason, I couldn’t bring myself to write. It’s not that I didn’t have anything to say. I actually had a lot to say, but my typing hands were heavy.

Do you think you are now officially back to blogging?

I can’t promise anything. But I will try. I will also be blogging at the Gemini blog.

Can you highlight the top 3 events that happened in your life in the past 60 days, just to fill the gap.

Sure. Business: We made another investment (eKoloko, an official post to come tomorrow). Music: I saw Pearl Jam live again, and I also saw Shalom Hanoch live. Sports: Patriots are back at it, Hapoel Haifa are not. Overall, seems like everything is “normal”.

Do you feel the Venture Industry in Israel is active again?

Absolutely. Deals are happening, especially since a lot of funds have dry powder to invest. However, Israel is part of the global venture industry, which is going through some turmoil. Nothing dramatic will happen in Israel in 2009/10, but we may see some changes in the local investment scene in 2-3 years.

What makes you optimistic?

AdMob. Mint. Gomez. Good companies are being acquired, and it feels that if we invest and support good companies, we will be rewarded.