Entrepreneurs make really bad VCs
Ok…I admit that is an exaggeration…but one of the VC industry’s well-known article of faith is that good VCs must have some entrepreneurial experience in their past lives/careers… (see e.g. one of Guy Kawasaki’s best posts: “The Venture Capital Aptitude Test“. Update: pl. see comment below.
The main premise being of course that unless you have been an entrepreneur, you can never understand what it is to be on the other side of the table, you find it hard to empathise with management and you cannot really add value.
Is this really true? While empirical evidence may suggest a strong correlation, it would be wrong to infer a causal relationship based on that.
Why do I say that? Look at John Doerr, arguably one of the most successful VCs in silicon valley (or anywhere else for that matter)…and look at Mike Moritz (a former journalist with TIME magazine)…On the other hand, I know there is Vinod Khosla…
But that’s really not my point…
Fundamentally, VCs and entrepreneurs are on the opposite sides of the spectrum…while VCs need to act from the “buy” side: cautious/ paranoid/ careful…entrepreneurs would usually be on the sell side: exuberant, wildly optimistic, believing that anything is possible, in a hurry…
So to a certain extent, whether you will be a good VC or a good entrepreneur is “hard-wired”…and it is difficult to be both…
No wonder then that great entrepreneurs rarely make good VCs and great VCs rarely make successful entrepreneurs…
Exceptions? I am sure there are some…Vinod Khosla for instance and of course, Hermann Hauser…but not a large list, I guess…
Right…or wrong?
See also:
Will Price’s comment on this topic and an interview with Larry Sullivan which talks about this but is also very readable – on its own – as it recounts his experiences of managing a global start-up (that got incorporated in 3 countries within 3 weeks!)
Find of the Day: This interview with John Doerr (from 1997) with some timeless advice for entrepreneurs (and VCs); also here.
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P.S. Over the coming weekend, I have promised myself to take the VCAT and am contemplating posting the results online (suicidal?)… watch this space.
