What’s it Like Being a VC?

Posted on Mar 6, 2010 | 133 comments


One of the questions I’m most often asked is, “what’s it like being a VC?”  I’ve been a VC for 3.5 years now.  Since I answer this all the time anyway I thought it might make an interesting blog post.Baby cryingI always start my answer to this question with, “you’d have to be a pretty big baby to complain about being a VC.” That’s true.  Here’s why:

1. I get paid (well) for interesting people to come in and tell me how they want to change the world – Being an entrepreneur is like having blinders on.  At least for the best entrepreneurs.  Some people do the conference circuit too much, get involved in lots of side projects and attend every entrepreneur dinner.  For me that’s always a bad sign.  When I was running startups I felt like a horse with blinders on because I was super focused on the content management market and ignored many other markets.

One of the things that I’m loving about this side of the people is that it really satisfies my intellectual curiosity.  People come into my office several times per week and tell my about their plans for changing the world.  They outline the problems that exist in markets, their approach to the solutions, they update me on competitors and they show me their economic models.  We have debates about how the industries will change / evolve.  It is the equivalent of going to a coffee shop every day and having intellectual debates.  In fact, I often take meetings in coffee shops.  I LOVE this part of my job.

2. If I’m interested I get to spend more time with them, if I’m not I don’t have to – A few companies per month come in that have fascinating business ideas that warrant my spending more time trying to understand their people, company, technology and market.  I get to do a deep dive on their business model, product roadmap and competitive positioning.  If I  meet a company that I don’t find very interesting I don’t have to spend any more time with them.  I’m not saying I don’t spend time trying to help entrepreneurs that I am not planning to invest it – anyone who knows me can attest to the fact that I do.  But let’s face it, as a VC you spend time with whichever companies you want.  As a CEO I had to spend tons of time with clients who ran business operations that were uninteresting to me.  It was my job to be interested.  No more.  You’d have to be a big baby to complain about being a VC.

3. I have no quarterly sales targets for the first time in a decade – For anybody who’s ever been in a company with sales targets you can attest to what a fire drill the ends of March, June, September and December can be.  Not any more for me.  It’s liberating.  I will obviously be judged on my performance.  But it’s measured in years and not quarters.  Don’t get me wrong – I still feel the pressure to ensure that the companies I’ve invested in perform well. So I spend much time with them and trying to help.  But there’s a big difference.

4. I get paid to network – I love meeting people.  When I go to conferences I never sit in the meeting section – I always cruise the halls meeting people.  That’s where I meet interesting people who tell me the truth.  On stage you hear people giving you the marketing version of their company.  I get to politely ask the questions you’d like to ask like, “what were your revenues, how much money have you raised, what are your plans going forward?”  I only do this when I’m interested in the company and when they’re interested in me.  But in these circumstances these are all fair (necessary) questions.

Also, my job doesn’t involve the daily grind of customer complaints, product outages, business partner / channel problems, hiring / firing, etc.  I work hard, don’t get me wrong – more than you might think.  No “golf Wednesdays” for me!  And the VC job has plenty of admin and minutiae.  But I’m a people person and I get paid to spend lots of time with people.  I get to network with angels, VCs, entrepreneurs, lawyers, etc.  I love it.

5. I go where I want, when I want – I can’t overstate the importance of this in my life.  I worked nearly a decade as a consultant – first building large scale IT systems and then doing strategy consulting.  Then I spent many years as a startup CEO.  I was always in a “service” industry.  That means you’re always operating on the client’s schedule.  You get on a plane at a moment’s notice because a senior customer agreed to meet you.  You call in from your vacation because you’ve had a service outage.  I went to Ibiza in Spain with my wife and in-laws before we were married.  They couldn’t believe how much I was on the phone.  We were in the final phases of acquiring a business and I couldn’t just say, “I’ll call you in 7 days when I’m back on the grid.”  There are still time pressures on VCs, so that hasn’t changed completely.  But I do go where I want and when I want a lot more than I used to.

6. I have a T&E account - Enough said.

7. I love spending time with entrepreneurs in the “romantic phase” – I love the startup phase of a business where we’re still romantic about our dreams to change the world.  The problems are much more manageable.  Once my company got to more than 100 employees I felt like I became “chief psychologist.”  That was fine but I prefer the earlier days.  As a VC I spend tons of time with companies at an early stage in their business.  And in stead of one set of issues to deal with I get the variety of discussing issues with many teams.  That’s fun.

8. We have very small teams – When you’re in your twenties you aspire to manage teams.  I think it’s seen as a sign of making progress in your career.  The idea that people “report to you” must validate some primal need.  In your thirties you realize that managing people means you have less time to work on the things that you want to do.  You have hours sucked up in one-on-one feedback sessions, annual or semi-annual performance reviews and you end up spending a lot of time resolving conflicts across your team members.  I still like spending time with our teams – at GRP Partners we have a great team – but I don’t have large numbers of people to be responsible for.  If I decide to take a last-minute trip to spend 2 days on a company due diligence session nobody is wondering where I am.  You’d have to be a pretty big baby to complain about being a VC.

Still, the truth is that I miss being an entrepreneur all the time.  Here’s what VCs don’t get fulfilled now:

1. We sit on the sidelines – The down side of VC is that exact same as I remember in consulting.  Too many VCs see their entrepreneurs almost like pawns.  They speak of “my CEO’s.”  They talk about how this company failed because the management team didn’t listen to my advice and that one succeeded because we helped point them in the right direction.  I think realistic VCs know that we only have an impact at the margin.  Maybe 10-15%.  That’s why picking great teams is so important.  And I think that too many VC’s don’t realize that the entrepreneurs are our customers – but that’s a separate topic. I hate not getting to own results.  We have a great board chat and talk about our strategic direction but then you go out and execute.  You get the good and the bad.  Those high highs and low lows are your own.  You live them, breathe them.  We live vicariously through you.  It’s like the manager of a basketball team.  We secretly wish it were us that got to take that 3-pointer with the clock running out.  And we’d love the rush of the teammates holding us in the air if we sank it.

2. There is less team camaraderie – I really get along with my partners well.  I knew them for 8 years before I joined GRP.  We end up out a lot at events: dinners, cocktail parties, conferences.  We travel together.  We spend the entire day together on Mondays in our partners’ meetings and seeing companies present.  Still, it’s different in a startup.  When you’re preparing to launch your company at TechCrunch50 and everyone pulls all nighters for the days leading into it you’re building much deeper camaraderie than exists inside of VCs.  When your site crashes and you get slammed by customers and in the press – you’re all in the sh*tter together.  There is something about the relationships you build in those times.  About 1 year in I asked many VCs about this and the feeling was nearly universal.  They said, “yeah, but we get that through our board interactions.  We build camaraderie there through the shared experience.  That’s true.  But it’s not the same.

3. I have to say “no” all the time – As an entrepreneur you’re used to hearing that what you’re doing won’t work and you turn up in the office every day to prove them wrong. My first company was a SaaS business in 1999.  Everybody said that companies would never put their documents “in the cloud.”  I was sure they were wrong and had the debate weekly.  As an entrepreneur you’re always focused on the “how can we find a way to make the impossible happen?”  People said that Google was going to dominate this market – we know we can do a better job.  You know, the Apollo 13 moment.  As a VC I’m required to say “no” ALL THE TIME.  I don’t enjoy it.  We get thousands of business plans per year.  I meet hundreds of companies.  We can only do a few deals per year.  Definitionally we say “no” many times per week.  I was with a very prominent VC on Sand Hill Road this week.  I always ask other VCs there thoughts.  He said the biggest disappointment since he moved over to VC was Tuesday mornings.  That’s when the calls go out every week to say, “I’m sorry but we’ve decided to pass.”  It’s much nicer to say “yes.”  [thank you to Tereza for reminding me I left section this out]

4. We are in a “get rich slowly” business - OK, I’m not complaining.  But I think many entrepreneurs have a misconception about this.  True, we’re paid better than many startup executives on an annual basis.  But I know many young partners in this business who have never gotten a “carry” check.  The upside for entrepreneurs is the equity in their business.  The upside for VCs is this carry.  If you have a $100 million fund you don’t get paid your carry until you return the initial money to your investors and then you typically get 20% of the profits above this threshold.  Well, since the industry hasn’t performed well in the past 10 years you have many younger partners who are still waiting for those checks.  That is in stark contrast to the late 90’s goldrush where VC partners made millions overnight as their companies IPO’d for crazy valuations.  On the positive side, we have a portfolio and therefore more diverse chances of success.  But there is no “sell early” option for VCs where a $20 million exit could change our lives.  But we obviously choose this side of the table. You’d have to be a pretty big baby to complain about being a VC.

Overall, I’m very happy on this side of the table.  I try to get my entrepreneurial fix in other ways:

1. Running a local community / mentorship program – I run a group called LaunchPad LA.  We’re gearing up to make big announcements about our second year program.  I’ll write about that in a couple of weeks.  I get to help control direction, make decisions and own results.

2. Writing this bl0g – This blog is a huge creative outlet for me.  I get to choose what I write about.  I might be controversial some times and get flack.  Other times I might get great results and approbation.  I can publish daily for weeks or not publish at all for a month.  I own the results.  I’m enjoying the chaotic creativity that comes with blogging.

  • http://bothsidesofthetable.com msuster

    Yes, truth serum:
    1. I thought it was a once-in-lifetime offer to be a General Partner in a fund
    2. I had worked with GRP Partners for 8 years before joining since they backed both of my companies
    3. I figured if I didn't like it or if they didn't like me I could always go back to being an entrepreneur
    4. I liked the idea of “going plural” and working with lots of teams
    5. I was at the right age & stage in my life
    6. I was a bit tired of the “services” industry life. I like the control and balance. I work the same amount of hours but choose when & how.

    I'm very happy in my role. But I can't say that the thought of being an operator again doesn't have some appeal.

    Mark

  • http://bothsidesofthetable.com msuster

    The biggest upside is the fact that I get to work with so many more people now, which I love. And I'm not in the political line of influence meaning I avoid some of the daily political / human discussions which are very time consuming and emotionally draining. That said, I think the comment above from Rob about Merry-go-round vs. Roller Coast is very apt.

  • http://bothsidesofthetable.com msuster

    Reid's comment is BS. It's always easy in hindsight to regret the ones that turned out well. Most investors will tell you the opposite – most deals that you are on the fence about and end up passing you end up not regretting because definitionally most businesses are not home runs. It's easy to lament the ones you miss – that's called Monday morning quarterbacking. And plus, Reid seems to have invested in just about EVERY other great company out there so he can't be too regretful!

  • http://bothsidesofthetable.com msuster

    True, there are always plusses and minuses to every job so satisfaction depends on what you are looking for in life. Sort of a very Stephen Covey sort of question.

  • http://bothsidesofthetable.com msuster

    Every individual VC is different including the partners within the VC. That's why reference checking is so important.

  • http://bothsidesofthetable.com msuster

    I seriously laughed heartily out loud at that. Precious.

  • http://bothsidesofthetable.com msuster

    Agreed. And it is the thing that I find most lacking in this job / industry. Every VC I've spoken with says the same. I sometimes feel like First Round Capital and True Ventures have figured this out a bit. The seem to me the closest thing to entrepreneurial organizations themselves.

  • http://joybricks.com/blog/ vruz

    I think it all comes down to what makes you happier.

    There's guys like Mark Pincus who have made the full circle around once or twice, so yes you can always go back to crazy schedules when you fancy them :-)

  • http://bothsidesofthetable.com msuster

    You'd be surprised at how many “young” (read: 45 and under) VCs secretly want to be entrepreneurs. I had so many of them tell me I was crazy to get into the business rather than start another company. It's true – the grass is always greener.

  • RayT

    If someone wanted to meet with you for career advice or an introduction. Would you help them out? Why? What would get you to meet with someone looking for an introduction to one of your portfolio companies?

  • http://bothsidesofthetable.com msuster

    Doh! Freudian maybe? Yes, attribution.

  • http://bothsidesofthetable.com msuster

    I meet people for career advice all the time. Can't do them all or I'd never get my work done. That's an advantage of speaking at universities and other events. I can talk one-to-many and stay for individual chats afterward. And I try to cover other topics on the blog. re: portfolio intros – if I had a person's resume and it was applicable I would forward it. Who wouldn't?

  • http://terezan.tumblr.com/ Tereza

    hey this stuff happens when you type at the speed of lightning :-)

  • don

    Nice post. I'm surprised, or maybe I'm not, that you didn't touch on the experience of raising money for your fund.

  • http://terezan.tumblr.com/ Tereza

    Promise retribution, or attribution? ;-)

  • http://bothsidesofthetable.com msuster

    Doh! Freudian maybe? Yes, attribution.

  • http://terezan.tumblr.com/ Tereza

    hey this stuff happens when you type at the speed of lightning :-)

  • don

    Nice post. I'm surprised, or maybe I'm not, that you didn't touch on the experience of raising money for your fund.

  • http://twitter.com/mikesimonsen mike simonsen

    >>2. Writing this bl0g

    I'm glad you mentioned this, Mark. I was commenting to a friend the other day how you've carved out quite a high profile for yourself via your blog and twitter despite having been in the VC biz for just a short time. Rock on.

  • http://twitter.com/mikesimonsen mike simonsen

    >>2. Writing this bl0g

    I'm glad you mentioned this, Mark. I was commenting to a friend the other day how you've carved out quite a high profile for yourself via your blog and twitter despite having been in the VC biz for just a short time. Rock on.

  • http://bothsidesofthetable.com msuster

    I'll write about that some day. Probably in a few years. Only been through it once.

  • http://bothsidesofthetable.com msuster

    I'll write about that some day. Probably in a few years. Only been through it once.

  • http://1000markets.com Matthew_Trifiro

    Great summary. I would hate your job.

  • http://1000markets.com Matthew_Trifiro

    Great summary. I would hate your job.

  • drbrianglassman

    thanks for the post

  • drbrianglassman

    thanks for the post

  • http://twitter.com/ahunn13 Andy Hunn

    Interesting Mark. As I know you're also an Accenture guy from back in the day when we called it Andersen and raised hell in St. Charles, I wonder if in some respects sitting on the 'other side' is similar to that decision to stay or leave a big consulting firm like Accenture – it has its cache, and I got to work on interesting projects from ground up (eg iridium), but at the end of the day jumped into startupland b/c I wanted to own the success or failure of the business rather than advising a client. Of course some big differences from AC – pay, freedom to roam, and new interesting people/businesses passing through your door every day.

  • http://terezan.tumblr.com/ Tereza

    I'm totally with you on that, Andy. I'm an ex-PwC Consulting (IBM) gal and it was great for a while, but I tired of being a eunuch in a whorehouse. Was really squirming to get stuff done and own it, like you say. But the skills learned, for sure, are helpful now!

  • http://twitter.com/ahunn13 Andy Hunn

    Interesting Mark. As I know you're also an Accenture guy from back in the day when we called it Andersen and raised hell in St. Charles, I wonder if in some respects sitting on the 'other side' is similar to that decision to stay or leave a big consulting firm like Accenture – it has its cache, and I got to work on interesting projects from ground up (eg iridium), but at the end of the day jumped into startupland b/c I wanted to own the success or failure of the business rather than advising a client. Of course some big differences from AC – pay, freedom to roam, and new interesting people/businesses passing through your door every day.

  • http://twitter.com/ahunn13 Andy Hunn

    Interesting Mark. As I know you're also an Accenture guy from back in the day when we called it Andersen and raised hell in St. Charles, I wonder if in some respects sitting on the 'other side' is similar to that decision to stay or leave a big consulting firm like Accenture – it has its cache, and I got to work on interesting projects from ground up (eg iridium), but at the end of the day jumped into startupland b/c I wanted to own the success or failure of the business rather than advising a client. Of course some big differences from AC – pay, freedom to roam, and new interesting people/businesses passing through your door every day.

  • http://terezan.tumblr.com/ Tereza

    I'm totally with you on that, Andy. I'm an ex-PwC Consulting (IBM) gal and it was great for a while, but I tired of being a eunuch in a whorehouse. Was really squirming to get stuff done and own it, like you say. But the skills learned, for sure, are helpful now!

  • http://terezan.tumblr.com/ Tereza

    I'm totally with you on that, Andy. I'm an ex-PwC Consulting (IBM) gal and it was great for a while, but I tired of being a eunuch in a whorehouse. Was really squirming to get stuff done and own it, like you say. But the skills learned, for sure, are helpful now!

  • http://twitter.com/starttowonder S Jain

    Mark first I should thank you for your Launchpad La and more importantly this blog. Gives lot of information for a first time Tech enterprenuer.

    Also, I am pretty sure many of us would love to enjoy the other side of the table. I think Ill try to take the route you took. Get my bigger better twitter up and running as a successful company and then switch the side.

  • TFrancis

    This is a good post and I agree with most of your observations. However, it takes about 10 years to really know what the industry is like – that is enough time to see how your companies have fared and if you have provided an attractive return to your investors.

  • http://startupcfo.ca startupcfo

    I'm 3 months into being a partner at Real Ventures, a seed fund based in Montreal. These points already ring true. As you say, Id have to a big baby to complain about my job

  • http://twitter.com/contayacom Contaya.com

    VC is a low-risk, low-reward way to get into the startup game. There are a couple of VCs (Moritz, Doerr) scraping into the bottom of the Forbes 400, but even they're eclipsed by the most successful entrepreneurs; the latter dominate that list. On the other hand it's true to say that most VCs never starve either, unlike unsuccessful entrepreneurs…

  • Allonyosha

    After reading this post, I've finally decided to document all my experiences in my first start-up. I think it's important to remember all the details years down the road. The “roller coaster” ride is different for everyone.