"The three worst backgrounds for a venture capitalist are management consulting, investment banking, and accounting. Management consulting is bad because it leads you to believe that implementation is easy and insights are hard when the opposite is true in startups. Investment banking is bad because it leads you to believe that everything can be reduced to cells on a spreadsheet and that companies should be built for Wall Street, not customers. Moreover, investment bankers are oriented towards doing deals, not building companies. Accounting is bad because it leads you to believe that history not only repeats itself, it predicts the future."I believe that while a lot of Guy is saying comes from first hand experience, isn't the above statement too much of a generalisation?
What is the latin word for such a fallacy of reasoning?
Finally he trains his guns on MBAs
The downside is that earning this degree (and I have one) causes most people to develop the hollow arrogance of someone who’s never been tested. All told, the downside of an MBA outweighs the upside.
So according to Guy the good backgrounds for being a good VC is Engineering and Sales.
I'm not too impressed to agree with him.
But what the hell do I know....I'm just a management consultant !
Gautam:
ReplyDeleteI agree with most of what Guy has said above. After interacting with quite a high number of VCs, I can say that I understand what Guy is talking about.
Management consulting: They tell people what to do. They have not done it themselves and hence do not know what it takes to actually do it. When you are on ground doing the real work, you realize that implementation isn't easy.
Investment Banking: They see everything as a transaction. Startups are not transactions and no entrepreneur would like to see him or his company reduced to a transaction. They believe that a company that makes semiconductor chipsets, tyres, or mobile handsets are all the same- and reduce them to few numbers on a excel sheet.
I don't know much about accountants who have become VCs, so I cannot comment on them.
isn't the above statement too much of a generalisation?
Yes, it is a generalization. To drive a point, one has to resort to generalizations and exaggerations. Imagine if Guy was trying to be politically right, then there would be too many riders, 'ifs', 'but's, and the whole message would be lost.
Finally he trains his guns on MBAs
How many MBAs are truly entrepreneurs?
So according to Guy the good backgrounds for being a good VC is Engineering and Sales.
You got it wrong here. How about ex-entrepreneurs, senior VP of a tier-1 company, how about CEO of a successful IPO? You did not include them in your list. Just because he did not write about engineers and sales does not mean he believes they are good VCs. You conclude quickly that the 'REST' are only engineers and sales. That's a wrong assumption.
I'm not too impressed to agree with him.
You have to understand that he is talking about startups and VCs. As an entrepreneur I completely agree with him. I am quite sure many VCs would agree with him too.