Why Venture Capitalists Are Full Of It, And By “It” I Mean Horse Maneure
Today, I’m still kinda fuming about my VC buddy’s bogus “hot tip.”
I understand that his intentions were pure, but that doesn’t exactly kiss my blog boo boo and make everything all better. Although, truth be told, I was somewhat appeased watching him lose 2 Gs playing poker last night. I think he was trying to impress this chick, Juliette (she’s got knockers from here to Katmandu) who was at game. (More on Juliette in future posts. She’s a handful. Literally.)
Anyway, my anger has led me to our current topic, describing why VCs aren’t worth their weight in gold, or in fool’s gold, for that matter - and of course I speak of the people, not specific firms nor the greater idea of Venture Capital.
Without further ado, here I go:
It’s really not their fault, you see. For the Venture Capitalist is a rare bread of predator, sitting atop the business food chain, the lion of the finance world, the master of his domain.
Everyday – and I mean every day - thousands of little peons, such as myself, reach out to the VC community asking for mere peanuts and offering tireless work, dedication, and talent. All the while, these people twiddle their thumbs with very contemplative expressions, make sure they get 36 holes in at Spyglass over the weekend, and take three-week vacations to Marbella in off-holiday season.
Now, I’ll admit they receive 5,000+ proposals each month that are complete hogwash, business plans that are more accurately cheap catchphrases: “A better Ebay” or “Think Yahoo.com, but my domain totally kicks more ass.”
At the same time, however, there DO exist scores of legitimate entrepreneurs out there, with solid backgrounds, talent, and work ethic, plus real vision and ideas. But VCs are rarely able to delineate the gems from the garbage, the promising from the pitiful.
Why? Well, many reasons.
For one, it doesn’t help that they read only the topic sentence for every executive summary put on their desk. Or that they enter every conversation (non golf-related) assuming it’s going to be a time sink. Or that they believe, or at least consistently purport to believe in private conversations I’ve had with them over the years, that 99% of people are brain-dead when it comes to properly forecasting and performing any sort of quantitative analysis.
A classic example I hear over and over again is that many VCs, when looking at your revenue projections, will add a year and move a decimal place over. The assumption being that no entrepreneur can ever objectively gauge the success of his own company or industry, regardless of any extensive experience or resumé the entrepreneur brings to the table.
OK, fine. Maybe the entrepreneur isn’t a soothsayer. But is the VC? Caution is one thing, but hubris is another.
This connect-the-dots mentality is the reason Venture Capitalists are probably the worst source of news imaginable, as this blog illustrated first hand this past week. I should have known that when my VC buddy told me “Scrabulous is over,” what he meant was “Listen, I don’t have the time, patience, or care to follow this situation, but I read a foreboding report on TechCrunch, so it must be true. Now get out there and make me some money.”
backlink: http://www.brianzafron.com/blog/?p=5
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