Comments on: Venture capitalists stymie innovation http://www.theprivateequiteer.com/venture-capitalists-stymie-innovation/ A vignette into the aberrant thoughts of a private equiteer Mon, 08 Mar 2010 09:31:42 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: AV http://www.theprivateequiteer.com/venture-capitalists-stymie-innovation/comment-page-1/#comment-4618 AV Wed, 07 Oct 2009 01:50:24 +0000 http://www.theprivateequiteer.com/?p=2250#comment-4618 Thanks... not sure of the exact stories, but I know the DFJ guys are big on investing in innovation and are pretty outspoken so it wouldn't surprise me. Anyway, whether or not they claimed ideas for themselves or not, we know that the bottom line is that the true innovators are entrepreneurs. I agree with Sam that the best VCs are those that manage funds and investor expectations well (but whether or not they have an MBA is irrelevant) AND have operational expertise. Thanks… not sure of the exact stories, but I know the DFJ guys are big on investing in innovation and are pretty outspoken so it wouldn’t surprise me. Anyway, whether or not they claimed ideas for themselves or not, we know that the bottom line is that the true innovators are entrepreneurs. I agree with Sam that the best VCs are those that manage funds and investor expectations well (but whether or not they have an MBA is irrelevant) AND have operational expertise.

]]> By: The Private Equiteer http://www.theprivateequiteer.com/venture-capitalists-stymie-innovation/comment-page-1/#comment-4613 The Private Equiteer Tue, 06 Oct 2009 21:46:22 +0000 http://www.theprivateequiteer.com/?p=2250#comment-4613 AV: nice blog. Good points too. Your point about VCs not claiming to be innovators is probably mostly true, but I do remember stories of certain DFJ partners claiming ideas for themselves. AV: nice blog. Good points too.

Your point about VCs not claiming to be innovators is probably mostly true, but I do remember stories of certain DFJ partners claiming ideas for themselves.

]]> By: The Private Equiteer http://www.theprivateequiteer.com/venture-capitalists-stymie-innovation/comment-page-1/#comment-4612 The Private Equiteer Tue, 06 Oct 2009 21:39:27 +0000 http://www.theprivateequiteer.com/?p=2250#comment-4612 Hey Sam... let me start by saying that most people who "bash" MBAs actually have MBAs (no exception here), so it's not so much a matter of jealousy or revenge or whatever. Secondly, what does "manage money" actually mean? And, how do MBA curricula help do this? If you're thinking portfolio theory, CAPM, etc., well, we all know that was a waste of time. An MBA is a short-course for some, a badge of honour for others, but it's a tool in the toolbox and nothing like years of experience building your own business. As for private equiteers working for investors rather than entrepreneurs (or ourselves)... it's true, but it's certainly not our focus. We can't invest without their capital, but once the capital is committed, we forget about LPs until it's time to raise the next fund. The consolation is that if we make money for ourselves, we make money for them too. It's just the way it is. Hey Sam… let me start by saying that most people who “bash” MBAs actually have MBAs (no exception here), so it’s not so much a matter of jealousy or revenge or whatever.

Secondly, what does “manage money” actually mean? And, how do MBA curricula help do this? If you’re thinking portfolio theory, CAPM, etc., well, we all know that was a waste of time.

An MBA is a short-course for some, a badge of honour for others, but it’s a tool in the toolbox and nothing like years of experience building your own business.

As for private equiteers working for investors rather than entrepreneurs (or ourselves)… it’s true, but it’s certainly not our focus. We can’t invest without their capital, but once the capital is committed, we forget about LPs until it’s time to raise the next fund. The consolation is that if we make money for ourselves, we make money for them too. It’s just the way it is.

]]> By: AV http://www.theprivateequiteer.com/venture-capitalists-stymie-innovation/comment-page-1/#comment-4610 AV Tue, 06 Oct 2009 21:06:55 +0000 http://www.theprivateequiteer.com/?p=2250#comment-4610 Here's my response to Vivek's piece: http://bit.ly/iPpEE You can't say that VCs stymie innovation without really examining the role that they play. Interestingly, what we're now seeing is VCs engaging in more seed stage investing (I took a look at this yesterday: http://bit.ly/3haHr3) which means there's going to be reliance on operational expertise and company building... maybe we'll see once and for all what newer VCs are really made of. Here’s my response to Vivek’s piece: http://bit.ly/iPpEE You can’t say that VCs stymie innovation without really examining the role that they play. Interestingly, what we’re now seeing is VCs engaging in more seed stage investing (I took a look at this yesterday: http://bit.ly/3haHr3) which means there’s going to be reliance on operational expertise and company building… maybe we’ll see once and for all what newer VCs are really made of.

]]> By: Sam S http://www.theprivateequiteer.com/venture-capitalists-stymie-innovation/comment-page-1/#comment-4604 Sam S Tue, 06 Oct 2009 17:44:08 +0000 http://www.theprivateequiteer.com/?p=2250#comment-4604 PE/ VC's work for their LP's (i.e. investors) who value their ability to manage money NOT for entrepreneurs This argument should target investors. If you have experience in operation but can not tell me how you will manage my money, why should I give you my money. That is why the best VC should be those who have BOTH operational experience and an MBA. Bashing the MBA here made no sense. PE/ VC’s work for their LP’s (i.e. investors) who value their ability to manage money NOT for entrepreneurs

This argument should target investors. If you have experience in operation but can not tell me how you will manage my money, why should I give you my money.

That is why the best VC should be those who have BOTH operational experience and an MBA. Bashing the MBA here made no sense.

]]> By: The Private Equiteer http://www.theprivateequiteer.com/venture-capitalists-stymie-innovation/comment-page-1/#comment-4298 The Private Equiteer Tue, 22 Sep 2009 22:40:11 +0000 http://www.theprivateequiteer.com/?p=2250#comment-4298 Hey Arun, great to hear from you. I may have been high when I wrote that; can't quite remember, it's all a blur. But I don't quite understand your argument either. I suggested that "the best" advisor of a business is likely someone with direct business experience. You quoted me and suggested I said they are "the only" worthwhile advisers of business. Big difference between the best and the only. Maybe this warrants a different context: say I want to break the world cave diving depth record, but I need a mentor. Do I look to schools with professors of speleology or do I contact the current world record holder? I'm not looking for any old mentor to guide me on my pursuit, I'm looking for the best available. The same goes for my startup, I want the best I can reasonably get. If the best I can get is a lawyer or consultant, then I've got other issues. TPE Hey Arun, great to hear from you.

I may have been high when I wrote that; can’t quite remember, it’s all a blur. But I don’t quite understand your argument either.

I suggested that “the best” advisor of a business is likely someone with direct business experience. You quoted me and suggested I said they are “the only” worthwhile advisers of business. Big difference between the best and the only.

Maybe this warrants a different context: say I want to break the world cave diving depth record, but I need a mentor. Do I look to schools with professors of speleology or do I contact the current world record holder? I’m not looking for any old mentor to guide me on my pursuit, I’m looking for the best available. The same goes for my startup, I want the best I can reasonably get. If the best I can get is a lawyer or consultant, then I’ve got other issues.

TPE

]]> By: Arun Srini http://www.theprivateequiteer.com/venture-capitalists-stymie-innovation/comment-page-1/#comment-4292 Arun Srini Tue, 22 Sep 2009 13:05:27 +0000 http://www.theprivateequiteer.com/?p=2250#comment-4292 "if you’ve never run a business, are you absolutely the best person to be advising a mature business?" Seriously, were you high when you wrote this? He's a teacher, would you expect einstein to be the only guy to teach the theory of relativity or armstrong to discuss about the moon's land? “if you’ve never run a business, are you absolutely the best person to be advising a mature business?”

Seriously, were you high when you wrote this? He’s a teacher, would you expect einstein to be the only guy to teach the theory of relativity or armstrong to discuss about the moon’s land?

]]> By: Vivek Wadhwa http://www.theprivateequiteer.com/venture-capitalists-stymie-innovation/comment-page-1/#comment-4276 Vivek Wadhwa Mon, 21 Sep 2009 14:21:27 +0000 http://www.theprivateequiteer.com/?p=2250#comment-4276 Thanks for your comments. I agree I did add a lot spice to the article, but was as factual as I could be. On the issue of whether VC's make an impact. Here is a study by Prof. Masako Ueda -- http://ssrn.com/abstract=1242698. I have also written about the age/experience issue -- http://www.techcrunch.com/2009/09/07/when-it-comes-to-founding-successful-startups-old-guys-rule/ Kauffman Foundation will soon be publishing my next paper titled "Making of a Successful Entrepreneur" which discusses how company founders rank experience as the #1 success factor. Regards, Vivek Twitter: Vwadhwa Thanks for your comments. I agree I did add a lot spice to the article, but was as factual as I could be. On the issue of whether VC’s make an impact. Here is a study by Prof. Masako Ueda — http://ssrn.com/abstract=1242698.

I have also written about the age/experience issue — http://www.techcrunch.com/2009/09/07/when-it-comes-to-founding-successful-startups-old-guys-rule/

Kauffman Foundation will soon be publishing my next paper titled “Making of a Successful Entrepreneur” which discusses how company founders rank experience as the #1 success factor.

Regards,

Vivek
Twitter: Vwadhwa

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