I read Becky Buckman’s article yesterday on Venture Capital and then watched my New England Patriots go perfect. Afterward, I was thinking how similar today’s entrepreneurial environment is to pro football. In reflecting on the Patriots historic win it made me think about all the entrepreneurs starting and building companies in today’s Internet era. Like the NFL, there is parity in today’s entrepreneurial environment . It doesn’t cost much to start an internet venture. Get some open source and just add ‘water’. Another entrepreneurial and VC trend is that startups are not just starting in Silicon Valley. Startups are global now. It’s harder to be a VC in today’s market. You don’t have all the deals within a stones throw from Sand Hill Road. Additionally as Marc Andressen said in his sarcastic bubble post . Here we sit, with over $7 billion in venture funding this year chasing exactly zero good ideas.
In an age of salary cap where the NFL established parity among teams, how can the Patriots put together such a dominant team? How come all the best football players want to play for New England? Because they flat out reward people who want to play football. They live and breed football throughout their organization. They want players who strive to play the best competitive football together as a team. Patriots Coach, Bill Belichick, is a football guy. I’ll never forget the last play of Doug Fluties career. Coach Bill let him kick an extra point by ‘drop kicking’ the ball. That’s old school football. The extra point meant nothing to winning that game but spoke volumes about Coach Bill’s attitude about people and football. He also lets linebackers catch footballs for touchdowns on designed plays. Coach Bill loves football and lets the best players play. If I played football I’d want to play for him.
As entrepreneurial founders build their business and raise money, who do they want to play for. It made me think who is the best VC in the world today. Who is the VC version of the Patriots organization? Which VCs do entrepreneurs want to work with? Which VC s ‘really’ live, breed, and support entrepreneurship? Which VCs value working with the best entrepreneurs to build the best ventures? Who are the New England Patriots of the VC business?
In today’s entrepreneurial climate you don’t here entrepreneurs saying, “I really want to work with Sequoia”. In fact the general trend among founders is to avoid venture capital. Why? A founder can’t relate to the dynamics of the big VCs and they don’t know if they can trust them. Ultimately their goals are not congruent.
It has been said that the traditional VCs care more about their image and their political position in their firm than the outcome of any of their ‘investments’ or founders. It is well known in Silicon Valley that VCs often root against one of their own partners investments, so they can attain more seniority and bonus in their firm. Sites like TheFunded are changing that. Word gets out and gets out fast.
Like the NFL there is a new era in venture capital. It is changing. There is new formula for domination. Are Sequoia and Kleiner the Miami Dolphins of 1972?Yesterdays Wall Street Journal had an article about the Founders fund and Peter Theil. The NY Times on Saturday had an article about Chris Sacca and the Google alumni investing together. You have Jon Callaghan and Toni Schneider at True Ventures, First Round Capital, and other. They are digging deep in trenches doing good deals. Is this the new winning formula in VC? One that rewards the founders and the entrepreneurial skill? It’s not just about the money any more. It’s about building something together as teams. Entrepreneurs want to work with like minded investors – ones with passion, skills, and knowledge to build a competitive and successful company.
My opinion: like the Patriots it all starts at the top of the VCs organization and it flows down to the coach (partners) and players (founders). In entrepreneurship today the best VCs are experienced entrepreneurs who understand what it takes to be a founder and reward founding entrepreneurs for their performance. This combined with lower capital requirements is why the I think the Founders Fund, True Ventures, and First Round Capitals will be the next Sequoia and Kleiner Perkins in venture.