Over the weekend, Frist Round Capital Entrepreneur in Residence Charlie O'Donnell wrote an interesting blog post that is making its way around the venture capital and startup communities and drawing a variety of responses. O'Donnell suggests that while some VCs began their careers as entrepreneurs, most native venture capitalists have trouble making the switch the other way. His reason behind this is that VCs operate with different goals, methods and mindsets which make the transition from VC to entrepreneur is an uphill climb.
Sponsor
O'Donnell speaks from his own personal experiences as a VC who tried to start his own company, Path 101, which ultimately failed. "I learned a ton about what it really takes to drive a successful business forward--skills and a mindset that doesn't necessarily square with the way venture investors think of the world," he says.
One of the differences between VCs and entrepreneurs he points out is the type of employees each values. O'Donnell says VCs tend to look at the leadership and the entrepreneurs as the top priority employees, while entrepreneurs will tend to place higher importance on the people "in the trenches," doing the programming and development. "Not many VCs really know how to evaluate team talent if they haven't run a company before--and that's a critical skill as an entrepreneur," he says.
Another wedge between these two types of businessmen that he notes is that entrepreneurs focus much more about what they can do with the resources they have, while VCs are constantly looking at what a company needs. O'Donnell says switching these mindsets can be difficult and that he spent too much time thinking of creating the "next big thing," rather than focusing on short-term goals and creating a solid foundation upon which to build.
Of course, as he points out, there are exceptions to the notion that a VC can't become a successful entrepreneur. As a commenter on O'Donnell's post points out, Hunch co-founder Chris Dixon began as an investor at Arbitrade and Bessemer Venture Partners before starting his own companies. Another commenter argues that its hard to make assumptions about this topic when the sample size of VCs trying to become entrepreneurs is relatively small.
Whether O'Donnell's suggestion has validity or not is certainly an interesting discussion, but the real lesson to learn from his post comes from his personal experiences in failure. One of the reasons O'Donnell doesn't think VCs make good entrepreneurs is that they may be prone to approaching the situation with advice for how to succeed permeating their brains. The trick is, success can be the product of any of a million different variables, and there is no single proven path to success. Instead, the best way to get there is to avoid failures.
Focus on the errors that most unsuccessful startups make and go out of your way to avoid them; more often than not you will find yourself inching closer and closer towards your goal this way. Just remember that errors and failures are not always things that were done that went wrong, they are sometimes things that were never done in the first place.
The question of whether VCs have a difficult time become entrepreneurs has drawn a mixed response so far from O'Donnell's blog, so what do you think? Is the road between them marked by a one-way street? Or is one side just paved a little more smoothly? Let us know what you think in the comments below.
Discuss
Posts
No comments:
Post a Comment