30 one-sentence views on the venture industry
Variance in outcomes is far higher than variance in entry price for a given investment.
If you don’t have both capital reserves and the ability to double-down in winners (through pro rata or founder relationship) it’s quite challenging to outperform as a fund.
Brand feels like a weak moat for any business, venture included, but is quite powerful in reality.
Competing to lead rounds head-to-head against top-tier funds is rarely a winning game unless you’re already a famous investor.
I would be reluctant to ever rely on deal-flow from other investors rather than founders you know personally somehow.
If a founder genuinely likes you as a person, trusts you, and has some basic level of respect for your firm’s brand, you’re most of the way to winning a deal, but that’s much easier said than done.
Most intro calls (both for hiring and investing) get to a decision between “No” and “This Is Promising!” within 5 or 10 minutes.
For any founder-facing role, never hire someone unless you have full confidence that they will create an A+ founder experience.
Plenty of people want to get into venture, but surprisingly few have done any meaningful reading or writing on the industry.
Weakness in any one of [sourcing, decision-making, deal-winning] will kill you, so build the firm such that gaps are plugged.
I’ve always regretted investments where the idea or market is more compelling than the team.
An absolutely stellar team, building in what I was convinced was a terrible market at the time, ended up becoming one of the fastest growing companies ever built.
“VC value-add services” never causes startups to succeed, but failing to secure future funding does kill them.
The world has been over-run by content marketing, and there’s a huge opportunity to produce 10x better startup-related resources.
The LP world has been over-run by traditional institutional marketing, and there’s a huge opportunity to build content for LPs that more accurately represents the bleeding-edge venture world.
There are not enough stellar people in talent/events/etc in the venture industry, and I would encourage brilliant and ambitious talent/events/etc people to consider diving in.
Many firms set up “platform” teams as serving the partnership, but treating every platform function as first-class alongside the rest of the firm is the only way to win in the long-run.
Solving the Succession Problem is extremely hard for venture funds, and I have great respect for those like Sequoia who have successfully cycled leadership more than once.
Hiring a couple less-than-stellar GPs apparently makes it near-impossible to solve the Succession Problem.
Some of the largest (and most historically successful) firms are already obsolete in the eyes of the younger generation of founders, and will wake up one day scrambling to redefine themselves.
A core challenge of firm-building is parallelizing conversations with LPs, so that smaller LPs commit now, but long-term LPs commit in 5 years.
The ground-game of timing a fundraise matters more than some fund managers think.
Successful founders and respected GPs are by far the most impactful supporters of a fund manager during a raise.
There’s a vast gulf between a recommendation or reference that sounds like “they’re good, you should definitely invest in them” and “I will lose respect for you if you don’t bet the farm on this opportunity, they are absolute killers that I would bet my net worth on.”
It takes a fund a decade to build reputation, but once that mountain is summited, the economics and momentum of venture are incredibly favorable.
Founders will often choose their investors on the simple basis of who asks the most insightful questions about the business.
Although it was a popular tagline for about 10 years, software has not in fact “eaten the world” yet. It’s still so early!
As much as I dislike the social media game, if you’re firm-building on a decades-long time horizon, it’s irresponsible to not lean into social media because the importance of web-presence will only compound in the generation to come.
Hyper-responsiveness (median founder text-back time of 1 minute or less) is greatly appreciated and a huge competitive advantage, and taking >24 hours to respond is a huge disadvantage.
As much as the realities of venture are a grind, working with energetic and ambitious founders all day is such an amazing privilege.
Did one of these resonate with you or spark questions in your mind? Tweet me @whrobbins.