[Business] Survival of the dumbest

There is a very interesting story in today’s New York Times’ Online Edition. Titled ”So You Want To Be a Venture Capitalist”. It accounts for the travails of a few high tech druids who could not make it in oh-so-no-brainer(?) world of venture capitalism. Which brings me to the topic - Is the corporate world, an arena for the survival of the dumbest?

Take for instance take this story about Google. It describes how the angel investors did some Bollywood-style manipulating to bring about the marriage of two VC’s and how the uptight founders had to be loosened up by a very elaborate song and dance routine. But the best part…

“I think John Doerr would say Bill Campbell saved Google,” says Kleiner partner Will Hearst. “He coached Eric on what it means to be a CEO—not the CEO of Novell but of a company like Google. He taught Eric it’s a lot like being a janitor: There’s a lot of shit you have to do.

As my second exhibit, I’d like to present to the jury this article about strategy vs execution. The excellent Fast Company article details the essence of success -

When a senior executive weighs a decision to risk tens of millions on an experiment, surely it is comforting to have an outside expert verify the strategy is sound. But regardless of the qualifications of the outsider, the strategy cannot be taken as gospel. There are too many uncertain factors that nobody can resolve. Even the best strategy is only a hypothesis. No matter who developed it, it must be assumed wrong.

What does any of the above have anything to do with VC’s ? Simple - the kind of VC’s who will eventually survive are the kind of dumb, paranoid investment bankers who will probably never invest in me at all. Because they will have their 2.5X return and are happy with it. Who wants to be dumb enough to fund the next Google.

However, as a counterpoint, Jeff Nolan has this to say about picking you VC - a financial investor is a good door opener. However the best advice that he gives is about having a checklist to choosing your VC (How often do they attend board meetings, do they have a track record of introducing you to other deals, etc.). And now this NYT article. It looks to me that all we are left with is Hobson’s choice. What the article does is paint a Quixotic picture of the VC arena, with every ne’er-do-well jumpin’ to be a VC. But maybe they are right. One of the brightest people I know, Rajeev Jain, who is now one of the youngest consultants in Oracle India says this about consultants vs technical leads - “the technical leads only know what is cool and what is cooler, but the consultant knows what will actually be sold.”. Maybe having a boring banker for a VC is not so bad after all.

… sign of poor execution was that the leaders never questioned the strategy and never revised it..

Th jury’s still out on this one. Tags: business angel vc startup


[Business] Survival of the dumbest


May 22, 2005

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