Chris Dixon: Things I'd do if I ran a big VC firm

http://cdixon.posterous.com/things-id-do-if-i-ran-a-big-vc-firm

by mcxx • 16 years ago

73 25 16 years ago

cdixon.posterous.com

earle• 16 years ago

(what I would change) / (why i dont actually run one) != what you you think it is.

amirmc• 16 years ago

Comments on the ones I found interesting (OP's already pretty brief)

#1 Lower management fees - Great idea from my outside perspective, but it'd worth knowing where those fees actually go in the first place. Some of it might even be useful (e.g spending time networking incurs costs - conference fees, travel, etc c.f #10)

#2 Keep a records of all employees in investee companies - Hmmm, nice idea but not too sure about the data-protection issues. As an employee, do I want my company's investors keeping tabs on me? Also, as a CEO, do I want my investors to keep tabs on my employees? What if we disagree about the impending death of the company and they try to pre-emptively poach someone for another portfolio company? (Perhaps this already happens).

#4 Have everyone tweet/blog authentically - Not convinced that all people in firm need to do this. One or two high profile folks should be enough. Public writing is not easy so leave it to those who want to do it.

#7 Have offices that look and cost like startup offices - If you're running a big VC firm, I'm not sure you can get away with 'startup' offices. Startup office are cheap because they have to be. Not necessarily because it's the best way for the company to operate. I see no reason why a VCs office needs to be anything like a startup's office.

#11 Have far fewer meetings with startups - i.e kiss fewer frogs. I don't think this works. You only get to do this if you're a very well known, successful VC because then good deals find you. Otherwise you need to be meeting lots of startups.

#14 Use brand to...recruit top talent (particularly engineers) from top schools [for portfolio companies]... - This is quite interesting, but I don't see it being particularly successful. People want to join companies, not necessarily join whatever portfolio company the VC thinks they might be useful for. It could also complicate the company dynamic e.g who does this engineer really report to? If there's a dispute, then what happens?

Edit: Removed the ones I didn't have many comments on

ivankirigin4• 16 years ago

A summary of a post that is already short and already a list is not needed.

edit: nevermind

yummyfajitas• 16 years ago

He didn't summarize, he responded to a few points.

bmelton• 16 years ago

Feel free to downmod me, but in defense of the parent, it isn't a summary, but a rebuttal / questioning of some of the points presented.

Some of the questions raised are interesting, and add to the discussion considerably.

jyothi• 16 years ago

On #2 & #14 in correlation - its a terrific idea to help startups build their team. Hiring is hard in early stages, less known, no time to dedicate on choosing candidates, fear of recruiting the wrong person etc.

Employees define the culture and a few key employees do change the scene for the startup at least on execution which is critical. Many of them might not be inclined or equipped to be CEO's but they are great contributors in the system. A relation/connection with the investor can easily convince these excellent talent to bet on less known startups at early stage.

Edit: rephrased

tibbon• 16 years ago

Most of these sound like pretty good ideas. Most firms probably don't do them just because they don't have to unfortunately.

zackattack3• 16 years ago

"- don't talk/tweet/blog about your vineyard, yachting, golfing etc while you tell your CEOs to work non-stop and be frugal etc. "

I don't really get this one. It seems like great advice for the CEO of a company, but not for a venture capitalist?

ivankirigin4• 16 years ago

Most VCs are richer than most CEOs, especially when you consider most CEOs are in their first startup and haven't made it yet.

zackattack3• 16 years ago

exactly... that's my first point: give them something to reach for, the end game.

my second point is that the VC is not really leadership so the example the VC sets is irrelevant.

zaidf• 16 years ago

Agree. When I see my VC friends tweeting about those things, it serves as another reminder of what awaits you when you win :)

rokhayakebe• 16 years ago

..,and maybe some male receptionists

ivankirigin4• 16 years ago

The financial anatomy of VC firms came as a surprise. It wasn't till I read "mastering the vc game"# that I understood how fucked things are.

The strucure breeds mediocrity and the culture that founders hate.

Unfortunately, the people that need convincing are investors in VC firms. Bad returns are the only thing that will convince them. Many regard the category of VC as doomed to significantly shrink; this small chunk of finance in general can't support itself. There are more VC firms than successful exits.

# horrible name, good book

hga• 16 years ago

Well, more VC firms than > $100 million exits over the last 10 or whatever years.

I agree there's plenty wrong (as you'll find with any industry or its institutions), but I'm not entirely sure you can blame VCs as a whole for their terrible recent results. Not only does it include two nasty recessions (the one early in the last decade was particularity focused in the areas VCs invest(ed) in), but the important of the IPO exit slamming shut cannot be overemphasized.

Venture capital had a great run from the end of the '50s to the beginning of the last decade, but rules of the game have changed and so will the industry. And as you note, most everyone is betting on a significant shrink as one of the changes.

Harj• 16 years ago

while reading this it struck me that we do most of these things at YC.

joshu• 16 years ago

Many of these are good ideas that the better vcs already do.

The "own x%" thing has to do with LPs and is probably unavoidable.

pg3• 16 years ago

The own x% thing is a consequence of two things: fund size and taking board seats.

bravura• 16 years ago

Could you explain?

pg3• 16 years ago

It's interesting what a large percentage of these we do. Almost all of them.

portman• 16 years ago

I had the same thought about First Round Capital.

FRC is one of our company's VCs. I have no insight into their accounting methods (#9), but they seem to hit all of the others except "have far fewer meetings with startups" (#11).

imack• 16 years ago

I find the tips relating to "VC as Staffing Agency" the most interesting. I wonder if this stems more from the NYC startup issue of competing with wall street for talent. If the focus is working for a portfolio company of [X], rather than startup [Y], it gives some brand cover for recruiting. It also allows startups to pool resources for recruiting by sending one recruiter to schools for the portfolio rather than each startup having to spare an employee for a few days to give a canned talk.

Chris Dixon: Things I'd do if I ran a big VC firm

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