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

    Phil you and me both. I'm 41 also. First company was at 31. Wish I would have started earlier. I miss it, too. But not sure I would do the same job now as I did 10 years ago.

  • http://bothsidesofthetable.com msuster

    Yes, that was supposed to be on my list! I'm going to update it. Thank you. I actually had planned to write that and forgot. You rock.

  • http://terezan.tumblr.com/ Tereza

    I have. Tremendously rewarding. Very hard to make money at it, though.

  • http://terezan.tumblr.com/ Tereza

    To me, that would be the hardest part.

    As a former consultant, my knee jerk reaction is to help them figure out how to make the company work. And that's not really what VC's can do, if they want to screen the whole universe of deals!

  • ramine

    That's a good point. My experience with Nordic VCs is rather poor, but I have to say US ones have always delivered very sharp insight.

    The problem we have here is that so many VCs in Europe are not making deals anymore.

  • http://joybricks.com/blog/ vruz

    Hi Mark, first time commenting here. (Fred Wilson recommended your blog heavily)

    As an entrepreneur, I'm curious about the reasons which drove you to abandon full-blown entrepreneurship.

    Although I can probably extrapolate from some of your comments here, but I'm sure it's not a single-issue decision and there must be a list of things that made you feel it was better for you to make the switch.

    cheers,

    vruz

  • http://david-noel.com David Noël

    First wanted to use the army analogy too but then thought: who I am to speak
    about an army unit. Glad you did, that's exactly how I imagine it to feel
    like.

  • http://www.altgate.com/ fnazeeri

    I've always said that being an entrepreneur is like having sex and being a VC is like being a voyeur. Entrepreneurs are exposed to all kinds of risk (rejection, disease, etc.) but they get to experience it all. VCs get their reward without having to take the risk of an entrepreneur (granted they take some other risks). Ultimately which you pursue (and at which you do well) depends upon how you get your kicks.

  • http://www.appwhirl.com Richard Jordan

    This is the best answer to this question I have ever heard or read!

    (file that under #commentsthataddnovaluetothepost)

  • http://www.appwhirl.com Richard Jordan

    Romantic phase – love the term. But it works both ways… we have a VC we're crushing on right now and don't even know if they're going to take us to prom yet!

  • http://twitter.com/JohnnyFontana John Fontana

    Do you think an upside to “sitting on the sidelines” is the fact that you can take the blinders off and get to actually be involved with a number of other companies? Just guessing by reading your blog and talking to people who have worked with you it seems like you are a very hands on and interactive VC (in a good way). So as opposed to just worrying about one market and one company, now you get to be involved with many, even if you aren't necessarily investing in them personally.

    Do you think it is more satisfying being in the trenches and building a successful company or being able to play a positive role in helping many other entrepreneurs?

  • http://cloudcomputing.blogspot.com/ Chirag Mehta

    I remember when someone asked Reid Hoffman about missed opportunities he said he regrets two things – passing on an opportunity to invest into Twitter and Sequoia bumping up valuation of YouTuve by 3x and taking them out of his garage before he could offer them a meaningful term sheet. As a VC you have so little time for a pitch and while focusing on the pitch there is a hidden golden jewel in that very entrepreneur that is so intangible and not-so-obvious. When you keep saying “no” on frequent basis how do you pesonaly deal with regret or remorse that the opportunity that you declined could be the one that you really needed?

  • http://stickyslides.blogspot.com Jan Schultink

    Yes, I did. Both for “external” VC presentations to new institutional investors, and “internal” presentations to existing LPs with a more candid portfolio review grid inside.

  • http://twitter.com/johnbelo Joao Belo

    Thanks for this post Mark. You pretty much lay out all of the reasons why I find a career in VC to be attractive.

    Changing the world is definitely something that drives you forward as an entrepreneur, but when I was one myself I always had the hope of being involved in other projects beyond my actual company. Reality dictates that it's a long road ahead to get to that point: you are either very successful and start acting as an angel investor or start launching corporate spinoffs, maybe have one or two projects on the side, sitting in advisory boards and so on. You end up dealing and speaking with the same people, the same companies, and can hardly shift away to other, more interesting projects. Having a broad range of interests, I find it quite hard to explore them working for a single company. Consultancy may solve this issue a bit, but you end up as a salesman in the end.

    VCs may suffer a bit from not having the thrill of overcoming entrepreneurial challenges, but they find an inner sense of completion that can hardly be found anywhere else.

  • Rob K

    When I was debating the VC vs. operating exec path, the folks at the Kauffman Fellows Program described the difference as the difference between a roller coaster and a merry-go-round. You can have fun on a merry-go-round, but you don't feel it in your gut. It's an apt analogy, and after trying VC, I did the unthinkable and went the other way.

  • Rob K

    Mark- Great post. The biggest difference for me between VC and being in a company is #2, the team camaraderie. There was nothing in VC for me even close to the “what are we going to do about some issue?” or the “go get 'em” of the annual sales kickoff meeting that comes from being inside a company.

  • http://arisdad.tumblr.com/ Alok Bhargava

    Mark thanks for an incredible read. Although I have worked in startups primarily, I am still working on starting my own. And your perspective helps tremendously. But are your views commonly held in the VC community? Is it possible that sometimes such sentiments or attitudes may get drowned beneath VC's execution-time worries? In my experience, the degree of autonomy in decision-making for entrepreneurs seems to be a recurring issue. None the less I appreciate the tension that exists for a VC – in a supportive yet guiding role, as a cheerleader for success yet conscious of recouping and then some more of their investment.

  • http://twitter.com/christianbusch Christian

    Nice, honest VC evaluation. If you wanted to expand, you could comment on the different types of relationship building and fund raising that apply to the two worlds – that might add another interesting angle. Enjoyed reading this!

  • http://www.altgate.com/ fnazeeri

    I've always said that being an entrepreneur is like having sex and being a VC is like being a voyeur. Entrepreneurs are exposed to all kinds of risk (rejection, disease, etc.) but they get to experience it all. VCs get their reward without having to take the risk of an entrepreneur (granted they take some other risks). Ultimately which you pursue (and at which you do well) depends upon how you get your kicks.

  • http://www.appwhirl.com Richard Jordan

    This is the best answer to this question I have ever heard or read!

    (file that under #commentsthataddnovaluetothepost)

  • http://www.appwhirl.com Richard Jordan

    Romantic phase – love the term. But it works both ways… we have a VC we're crushing on right now and don't even know if they're going to take us to prom yet!

  • Rob K

    When I was debating the VC vs. operating exec path, the folks at the Kauffman Fellows Program described the difference as the difference between a roller coaster and a merry-go-round. You can have fun on a merry-go-round, but you don't feel it in your gut. It's an apt analogy, and after trying VC, I did the unthinkable and went the other way.

  • Rob K

    Mark- Great post. The biggest difference for me between VC and being in a company is #2, the team camaraderie. There was nothing in VC for me even close to the “what are we going to do about some issue?” or the “go get 'em” of the annual sales kickoff meeting that comes from being inside a company.

  • http://twitter.com/christianbusch Christian

    Nice, honest VC evaluation. If you wanted to expand, you could comment on the different types of relationship building and fund raising that apply to the two worlds – that might add another interesting angle. Enjoyed reading this!

  • Pingback: What’s it Like Being a VC? | CloudAve()

  • desmondpieri

    Good post. Elaborating on point #2, I imagine being a VC you never get to have great experiences like this one, my first task as interim COO at one small, VC-funded company:

    http://changeagentdes.com/2008/08/10/my-first-t

    Des

  • http://terezan.tumblr.com/ Tereza

    Des that's a great post!

  • desmondpieri

    Thanks. I enjoyed the experience and I enjoyed writing about it.

  • http://www.repeatablesale.com/ Scott Barnett

    As they say, “the grass is always greener on the other side” – so it's great Mark that you presented BOTH sides and pointed out the pros/cons to each. Many of us entrepreneurs look longingly at VC's and wonder what it would be like to be in your shoes, so thanks for the glimpse! I personally resonated with the “strategy vs. execution” comment – it's really important to understand your personal DNA and what drives you – I personally made a career decision to stay on the execution side because I love it so much, and helping with “just” strategy would not be fulfilling enough for me.

    Having said that, the description of your job does make me curious about life as a VC :-)

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  • http://bothsidesofthetable.com msuster

    I love the analogy of roller coaster vs. merry-go-round. May steal that some day but promise retribution. Thanks for the comment.

  • 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://vruz.tumblr.com/ 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.

  • desmondpieri

    Good post. Elaborating on point #2, I imagine being a VC you never get to have great experiences like this one, my first task as interim COO at one small, VC-funded company:

    http://changeagentdes.com/2008/08/10/my-first-t

    Des

  • 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://terezan.tumblr.com/ Tereza

    Des that's a great post!

  • desmondpieri

    Thanks. I enjoyed the experience and I enjoyed writing about it.

  • http://www.repeatablesale.com/ Scott Barnett

    As they say, “the grass is always greener on the other side” – so it's great Mark that you presented BOTH sides and pointed out the pros/cons to each. Many of us entrepreneurs look longingly at VC's and wonder what it would be like to be in your shoes, so thanks for the glimpse! I personally resonated with the “strategy vs. execution” comment – it's really important to understand your personal DNA and what drives you – I personally made a career decision to stay on the execution side because I love it so much, and helping with “just” strategy would not be fulfilling enough for me.

    Having said that, the description of your job does make me curious about life as a VC :-)

  • 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

    Promise retribution, or attribution? ;-)

  • http://bothsidesofthetable.com msuster

    I love the analogy of roller coaster vs. merry-go-round. May steal that some day but promise retribution. Thanks for the comment.