So you think you want to be a VC. It sounds like a pretty cool job, after all. You have good pay and benefits, get to meet with lots of interesting entrepreneurs, play with cool technology, can hang out in khakis all day…
But what about the dark side of venture capital? What’s the worst part about having an office on Sand Hill Road and investing other people’s money? (Hint: It’s not eating breakfast at Madera, getting coffee at The Creamery, or having drinks at the
Four Seasons Battery every day.)
A thread on Quora seeks to find an answer to just this topic, and it’s one of the more interesting reads you might run across on the QA site. While there are lots of great answers from folks like Mark Suster, Ethan Kurzweil, and Andrew Parker,* the runaway favorite is a response from an anonymous VC who claims 10 years of experience as a general partner at one of the bigger venture funds out there.
While noting that being a VC “is really the greatest job on earth” and that “saying no” wasn’t a hard part of the job, just part of the job, Anonymous goes on to describe the things that really do suck about being a VC… Which can pretty much be boiled down to “dealing with other VCs.”
That includes both VCs within your own firm, as well as those you co-invest with. Let’s start with those you work with directly:
At a large fund, there are lots of partners. And what it takes to become a partner at a big fund and stay there for years is often a high asshole factor, ability and desire to deal with firm politics and internal jockeying for power.
Don’t get me wrong. There are some great great partners. But I think 2/3rds of the people in the GP ranks at big firms have massive egos (as one LP put it “VCs have more ego per dollar of return than any asset class we know of”)
Not surprisingly, Anonymous goes on to break out the “crazy back room politics” general partners deal with, as well as senior partners who don’t add a lot of value and JUST. WON’T. RETIRE.
So maybe you’re able to navigate the assholes you choose to work with. What about those you end up on boards with? Anonymous paints an even bleaker picture there: When it comes to companies that have multiple VCs as board members, each has “their own agendas and egos”… And, big surprise, those agendas aren’t always focused on what’s best for the company, but external stuff like “fund reserves, fund life, etc.” which impact their decisions and advice.
If you can get through all of that, then you’re faced with dealing with the clueless limited partners who invest in your fund. As Anonymous describes, “LPs are the lagging-most indicators in the entire economy.” And, well, don’t really understand (or care to) what they’re actually investing in.
Anonymous also describes all the loneliness associated with being a VC, as well as the emotional ups and downs that they go through when portfolio companies aren’t really working out the way they’d hoped. But let’s face it, it’s tough to feel sorry for anyone making “$500k to $2M per year” whose job it is to pick winners and losers in the game of tech.
Anyway, now here’s the fun part: We know enough about Anonymous to make a reasonable guess as to who he or she is, or at least which firm he or she works for. Being a general partner for 10 years at a “big fund” with “multiple tiers of partners,” “crazy back room politics” and “senior partners who are well past medicare age” kind of narrows things down a little. (Or, well, maybe not.) Anyone care to take a guess which firm we’re talking about?
* My favorite response actually comes from Kristine Lauria, who is married to a VC and says the worst part of being one is “High risk of divorce because you never see your wife.” OOOOH BURN.