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Category Archives: Venture Creation

Brother From Another Mother: VCs and Rappers

photo(Guest post by Mahbod Moghadam)

Rappers want to be venture capitalists, venture capitalists want to be rappers: it is a tale as old as time. It totally makes sense, cause both rapper and VC are not actual professions – they are both kinda what you tell friends and family members you’re doing when you’re unemployed. Also, in both fields, appearance is everything. The rapper needs to have the tricked out Mercedes-Benz and the venture capitalist needs the Tesla with the “Carbon Footprint” limited edition 22-inch rims..

As former founder of Rap Genius and current founder of Mucker-based Everipedia (aka “Thug Wikipedia”) – I have dealt with a lot of capitalists as well as rappers. Sometimes, I can’t even tell them apart. In the case of Rap Genius board member / investor Ben Horowitz (aka “Emcee Tic Toc”) – he is in fact both… which got confusing, especially when he would wear the big gold chains to board meetings and stuff…

Below, I have listed some of my favorite rappers along with their VC “spirit animals” – please feel free to send me more suggestions to add to the list! (Tweet at me: @mahbodmoghadam)

John Doerr is…….. GUCCI MANE

John Doerr has been keeping a low profile recently, probably because Gucci Mane is in prison. But both of them will be making a strong comeback in 2016! Think about all of the young wannabe “struggle rappers / struggle venture capitalists” whom these men have inspired! Furthermore, John is from Saint Louis (ask his tattooist..) and attended Rice University – so he is reppin the d-d-dirty dirty South.

Paul Graham is……. DR DRE

PG is the composer of the beats for the entire West Coast – it is not about his own projects, it is about the culture he has inspired. Also he likes to floss and drives a cherry red Porsche – fuel efficiency be damned! He is very rich, just like Dr Dre after selling Beats by Dre to Apple. Rumor has it Jessica Livingston ghostwrites his verses! (You didn’t hear it from me tho..)

Jason Calacanis is…… RICK ROSS (rrrrrugh!)

Jason is the “Falstaff of tech” – he is a bon vivant through and through. Much like Rick Ross, his interests are not limited to tech – I could totally see him opening up a chicken wing chain like Rozay’s famed WingStop. Jason is the kind of investor who will share a 20-piece chicken wings with you and tell you exactly what he thinks of your product – he pulls no punches! Brutal, refreshing honesty. Rrrrugh!

Bill Gurley is……. AESOP ROCK

I was going to put GZA for Bill – the point I’m trying to make is, this dude is a thinking man venture capitalist – very rare in the VC world. Bill is the Marcus Aurelius of VC, the VC-philosopher.. much like Aesop Rock has the largest vocabulary in all of rap, Bill has the largest vocabulary of any venture capitalist (eventually Rap Genius will prove this…)

Marc Andreessen is…… 2PAC

I’m not just saying this cause they are both bald ok? Marc Andreessen is the definition of “thug life”. He is married to “The Princess of Silicon Valley” aka Laura Arrillaga-Andreessen – similar to how 2Pac was engaged to Quincy Jones’ daughter when he was shot to death. Andreessen’s passion for bitcoin is reminiscent of 2Pac’s “M.O.B.” philosophy. (ps Balaji Srinivasan is his Hussein Fatal in this metaphor..)

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What Entrepreneurs Can Learn From the 5 Craziest Investor Meetings

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As a startup founder, a huge amount is staked on your ability to fundraise. Investment means you have something to live on while you turn your idea into a reality. It allows you to hire and spend money on the things you need to get your startup off the ground. Funding means survival.

As an investor, I appreciate these high stakes and the passion of entrepreneurs who just want someone to believe in their vision. However, sometimes that can go a little too far. I’ve had a number of crazy investor meetings over the course of my career, and each of these extreme cases has yielded some valuable insights of what to do, and more importantly, what not to do, when raising venture capital.

Continue at Entrepreneur Magazine

Bill and Ted

Tale of Two Valleys: LA and the Bay Area from an Investor’s Perspective

Almost 30 years ago, my father decided to uproot the entire family from Taiwan to the United States so that his  academically “inconsistent” son could have an education tolerant and perhaps even encouraging of his idiosyncrasies. As an entrepreneur himself, founding and operating printed circuit board factories in Taiwan, my father was debating between two places to immigrate to and build his next new venture: Los Angeles (“The Valley” . . .aka San Fernando Valley) and Santa Clara (“Silicon Valley”).  At the time, LA and Santa Clara were both the epicenter of the technology industry due to the significant overlap between the aerospace/military industry (Los Angeles) and the computing business (Silicon Valley). In fact, in the 70’s and 80’s, the distinction was almost entirely semantic, as the military and aerospace industry invested ungodly amounts of capital to create technology breakthroughs that eventually saw wide commercial adoption in the personal computing industry.

Over time, though, military spending wound down and many large aerospace and military companies left Southern California. Los Angeles, at least metaphorically, became more of a media/entertainment town. At the same time, the consumerization of the technology business made Silicon Valley the de facto capital of all things tech.

My father eventually decided on Santa Clara (Saratoga, more specifically), and so I grew up in the shadows of the orchards of Cupertino and the nondescript concrete startup boxes of Santa Clara. After stints as a technology investment banker, a dot-com entrepreneur, and a product manager in Silicon Valley, I moved to Los Angeles in 2006.  For the last couple of years, I’ve been investing in startups as a partner at Mucker, while spending a lot of time in the Valley working with potential co-investors and partners.  My partner Erik Rannala has had a similar experience, having worked as a VC at Harrison Metal before moving down to LA to co-found our seed stage venture firm. Given our backgrounds, we often get asked about what makes the tech scene in Los Angeles different from that in the Valley. These are some of the major differences we have seen over the past few years:

“Quality” vs. “Sophistication”

Many arguments are fought about the “quality” of entrepreneurs and companies in Los Angeles. From my experience, it’s not necessarily about “quality,” but rather about “sophistication.” It’s probably not too controversial to say that the median level of sophistication of early stage entrepreneurs in Los Angeles is lower than that of Bay Area. If you took a random sample of 100 entrepreneurs here in LA, over 50% might not be able to tell you how to technically calculate 90-day cohort retention or how to build a cash flow statement. That number in the Valley might be closer to 10%.

We see a lot of great entrepreneurs with incredible market vision, loyal customers, and flawless execution who simply do not yet speak the same language as the typical Valley entrepreneur and executive.  This lack of “sophistication” does not always correlate with the lack of success. Encyclopedic knowledge of term sheets and startup buzzwords can be quickly learned, trained, and packaged. Investors in LA simply have learned to look for the underlying signals of “quality” rather than the more superficial symptoms of “quality.”

“Stamps of Approval” and “Opportunity”

Go to any of the LinkedIn profiles of entrepreneurs in Bay Area and you see names like Google, eBay, Apple, Yahoo, PayPal, and Facebook littered throughout. It’s easy (and perhaps intellectually lazy) to use those big brand names as a proxy for the quality and potential of these entrepreneurs.

In LA, we don’t see as many entrepreneurs with these types of backgrounds as we do in companies up north. However, it’s a mistake to believe that the lack of these stamps of approval is a sign of anything but the lack of opportunity. We don’t have as many of these signature companies in LA, and so our entrepreneurs often do not have the opportunity to cut their teeth at these more traditional proving grounds. While such an experience would be nice, it certainly is not a pre-requisite. In fact, employees of these huge platform companies often do not know how to growth-hack their way from a standing start; they may be too accustomed to the massive traffic and structural advantages of their previous employers. As a result, we’ve learned to be just as impressed by an entrepreneur who previously launched a chain of Taco stands as we are by an entrepreneur who was formerly the original product manager of Google Maps.

“Ability” vs. “Knowledge”

In the same vein, because not as many entrepreneurs in Los Angeles worked at companies like Google or Facebook, a lot of them have not really gotten the training they need to properly communicate requirements, run a scrum, or conduct A/B testing. Certainly it is a negative to not have acquired the basic skills of product management. However, given some time, coaching, and practice, great entrepreneurs have the innate ability to quickly gain the muscle memory to not just execute and repeat, but also to build and improve.

As VCs, we simply have to understand the risk / reward of these type of investments, and to actually be excited that we can be operationally involved in adding value ourselves.  Having spent the bulk of our careers as entrepreneurs, we relish the opportunity to roll up our sleeves and help.

“Dealflow”

Dealflow in Southern California is much more organic and less efficient.  In Silicon Valley, given how tightly knit the ecosystem has become, and how well-networked entrepreneurs have learned to be, there is almost no such thing as “proprietary” deal flow. The top tier funds see almost all of the best deals.

The best entrepreneurs have been coached to run a tight process, to shop their term sheets to a myriad of VCs, all of whom have great reputations and large networks. In Los Angeles, that network has yet to become as efficient, and the reputational transparency of investors has yet to be cemented. (Not to mention that there are only a handful of active, institutional venture funds based in Los Angeles.)

Furthermore, entrepreneurs don’t necessary build their businesses to be venture-funded. Oftentimes they see a market need and simply want to serve those customers. By the time the venture financing topic is broached, they already have significant traction for their business. In that context, these entrepreneurs have come to look for specific VCs that provide the exact value-add they need.  I regularly come across companies who happen to have the #1 paid app in the App Store fly under the radar for years before raising venture capital.

“Diversity” and “Domain Experience”

While Hollywood dominates in terms of perception and mindshare, in reality, Los Angeles is a middle-market town with significantly more diversity than the Bay Area from an industry perspective. Categories like retail, automotive, logistics, distribution, manufacturing, and many others all play a significant role in employment AND entrepreneurship in Southern California. As technology continues to encroach and disrupt traditional industries, we are seeing an increasingly diverse set of entrepreneurs (especially in B2B categories) tackling industries that very few entrepreneurs in the Bay Area ever think about, given their lack of exposure. While in Silicon Valley entrepreneurs often ideate through a superficial process of derivative “X for Y” concepts (e.g. “Uber for pets”), Los Angeles entrepreneurs often come from a specific industry with deep domain expertise, offering to use technology to solve a huge need with which they have deep, first-hand experience.  It doesn’t take a genius to know which team, with proper resources and guidance, will have a higher likelihood of success.

“Cashflow” vs. “Big Idea”

When I first arrived in LA in 2006, the most common complaint about Los Angeles companies was that they are often more focused on generating cashflow than building long term strategic defensibility and achieving an outsized outcome as a result (arbitrage and domaining are two business models that originated and thrived in LA). Much of this is due to the lack of venture capital – seed-stage venture capital, in particular – to get companies off the ground here in Los Angeles. However, the ambitions of this current generation of Los Angeles entrepreneurs are no longer stunted relative to those in Silicon Valley.

LA is the home of Snapchat, Tinder, and Whisper – social mobile apps swinging for the fences. Likewise for Oculus, pioneering next-generation technologies like virtual reality.  These are businesses aiming for scale and impact, not merely monetization. Los Angeles is also a city of media and brands – industries with which scale and reach are even more critical than even on the Internet.  As these industries continue to cross (or collide?), we will increasingly see the outsized outcomes that VCs require, and along with them, the exponential increase in the ambitions of our entrepreneurs.

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The Term Sheet Mating Dance

There is no word more sacred and yet over-used than “term sheet” in the entrepreneurial circle. The pursuit of the mythical VC term sheet has blinded entrepreneurs from the real goal of building a business: revenue, customers, users, engagement and retention. Securing a term sheet is about more than money — more than survival. It’s validation. It’s the exact moment when the entrepreneur, the beggar, turns into the auctioneer of precious equity. It is, in the immortal words of Mark Zuckerberg, when a struggling entrepreneur gets to turn the table and declare to the world, “I’m the CEO, bitch.”

It turns out there is a big difference between the technical “terms” of a term sheet and the complicated dance of actually receiving/procuring/pillaring a term sheet. From what I’ve learned over the years as an entrepreneur and now as a VC, the mating dance of term sheets can be put into a few genotypes.

Continue at Techcrunch . . .

Cactus

The Seed Valley of Death: Caught Between $19B and Series A Crunch

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Even before Sequoia Capital made $3.5 billion on a $60 million investment in WhatsApp, the seed- and early-stage funding landscape had already changed significantly. Most major VC firms have significantly scaled back their seed-stage investment programs.

Furthermore, many Series A funds will openly admit that the traction needed to raise a Series A today as opposed to 18 months ago is comparable to Series B.

At the same time, seed funds are raising more and more money for their new funds. Five years ago, the average seed fund was about $35 million; today, that number is closer to $100 million. The need to deploy more capital and the reality that traditional Series A firms have moved upmarket from the traction perspective for Series B-like companies has translated into seed funds happily deploying capital in companies that no longer look like “seedlings.”

Continue at Re/code . ..

Stanford William Hsu

From Hubris to Confidence

What does Mark Zuckerberg, Jack Dorsey, Larry Page, Marc Andreessen, Elon Musk, and Peter Thiel have in common with me? We’ve all guest lectured at the Stanford Entrepreneurial Thought Leaders Seminar.  Here is me doing my best to not embarrass my fellow esteemed lecturers. . .

Stanford William Hsu

brad

Catching Up on Bylines: Lies & Hacks

Making fun of myself and the bullshit I spew on a daily basis . . .

It’s almost been two years since I co-founded LA-based accelerator MuckerLab and since then, I’ve gotten pretty good at lying.

Not the “pants on fire” kinds of lies, but more like “Pretty Little Liars” ones. These are the types of lies that VCs and accelerators dole out to entrepreneurs because they are somewhat true, mostly innocuous, often keep people from crying, but are most definitely misinterpreted by entrepreneurs.

read more at Business Insider

A refresh of an old post from my now-defunct personal blog from 2008 (ya 2008!) . . . on how to build liquidity in marketplaces

Many investors love “disruptive” businesses. This is in part because these businesses are unencumbered by legacy constraints that had previously been hardwired into the companies and industries these startups are trying to disrupt. One such business model is the “online marketplace,” an entirely new business category not possible (at scale) before the Internet.

During the first dot com era, marketplaces were all the rage – with eBay leading the charge. By the end, 99 percent of the B2B marketplaces had cratered and only B2C eBay was left standing and thriving.

The prevailing consensus at the time was that B2B marketplaces were too hard (e.g. it’s really a software business, not liquidity driven) and that B2C marketplaces could not be built under the giant momentum of eBay’s “network effect.” Investment stopped, and entrepreneurs focused on other categories.

read more at The Next Web

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Prevailing Wisdom

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1994 – “Consumers are fickle and unpredictable. Consumer products and services are hit driven, it’s really hard to build a scalable consumer company”

(Internet)

1996 – “It’s impossible to get to build a billion dollar company selling widgets at $15 and taking $1 commission one at a time”

(eBay)

1998 – “There is no room for personal productivity software startups – Microsoft will eat your lunch when you get big enough and Symantec will take the crumbs”

(Evernote, Dropbox)

1999 – “The search engine game is over”

(Google)

2002 – “the social network fad is over”

(Myspace, Facebook)

2002 – “Information Technology is not a competitive advantage”

(Everything)

2002 – “Consumer electronics is a low margin and highly competitive industry”

(Apple)

2003 – “The browser war is over, Microsoft has won”

(Firefox)

2005 – “Sales cycle is too long for software companies selling to government and educational sector”

(Palantir)

2008 – “RIP, Good Times”

(2009)

2011 – “There is no network effect in the enterprise software business; it’s not a category we invest in anymore”

(Success Factor, Workday)

2013 – “Media and content is a hit driven business – we simply don’t invest in it”

(?????)

 

 

 

Software Eating Industries

pacman-disk-300x225A little more than one year ago, Marc Andreessen wrote a seminal piece which has defined venture investing and entrepreneurship since. The global trend for software powered innovations to permanently impacting every part of our lives and every part of our work is unstoppable and just at the beginning. Three generations into the birth of information technology, we are at the global inflection point – while it might not seem like it today, a hundred years from now it would be obvious and self-evident. Since Marc’s prognostication, what has become increasingly clear is that the next 20 years of venture investing and entrepreneurship will also become a different animal than the last 20 years. Instead of funding or founding enterprise software companies – these new startups are increasingly hybrids.  From the outside, they are vertically integrated challengers to decades if not hundred-years old incumbents. Not content to simply sell incumbents software, these companies merge domain expertise with software native DNA to attack incumbent head on. Instead of aiming for hundreds of millions of dollars in software licensing revenue – they want to conquer existing industries and aim for tens of billions of dollars in widget revenues.  Yes, the stakes are much higher this time. It is good time to get into the game from either side of the table. Software is eating industries.

For the last 20 years consulting firms like Accenture, PWC, Deloitte have made hundreds of billions trying to teach incumbent companies from every single industry how to use software as a competitive and strategic advantage.  Some, like Charles Schwab, have made the transition so seamlessly that they left little room for true disruption. While others, like Blockbuster, are already distant memories. Some had once argued that software is not a competitive advantage – that all the old dogs will learn new tricks and there will be little left for valley entrepreneurs and VC’s to pick over.  Turns out, for whatever reason – cultural, business model, leadership, even bad luck – many incumbents have yet to figure out what to do with software, always on connectivity, and technology. 20 years since Mosaic, if they haven’t figured it out – they probably will never figure it out.  The list of industries where the marketshare leader still haven’t learned how to use software to accelerate their customer acquisition, improve their customer retention, increase their customer satisfaction, lower their manufacturing cost, shorten their supply chain etc, etc is long and impressive. In fact they tend to be B2B rather than B2C companies – while the popular bet these days in B2B for many is in “enterprise software” – maybe the better bet is in betting on these software native challengers.

There are many examples already of this trend – Uber, Silvercar, Surfair,  (interesting that we all piled into the transportation sector).  There is, in fact, an entire technology category that fits this thesis perfectly  – etail or commonly referred to as e-commerce. Instead of trying to sell e-commerce software to Barnes and Noble, Bezos decided to sell books instead. Hundreds of billions of dollars later, Amazon is one of the most valuable companies in the world.  Smaller companies like Warby Parker are taking on branded incumbents in eyewear by re-inventing and collapsing distribution and manufacturing channels. E-commerce is the canary in the coal mine.  Most market research analysts have e-commerce penetration into retailing at 8%-11%, yet billions in value has already been created and reaped by entrepreneurs and venture capitalists.  Retail is first industry to be nibbled by software – there are hundreds more that have yet to even feel the bite. If the rest of the bowling pins begin to fall, we are in for multiple tidal waves of value creation (and destructions).

Of course this changing new venture landscape will also require different type of entrepreneurs – one that merges a software mindset with industry specific knowledge, network, and experience. These entrepreneurs were impossible to find just ten years ago – those who were born “software native” but have spent enough time in the target industry to move beyond consultant level understanding of the motivations of different actors in the business. They are early thirty-years old up and coming executives in old and un-sexy industries looking to change the world. Ironically, they are most likely not the Ivy League or Stanford grads that Silicon Valley VC’s love to back. And they are most likely not living in the Bay Area drinking the usual coolaid.   These entrepreneurs and companies are just as likely to be found on University Ave in Palo Alto as they are in mid-market industrial towns like Columbus, Pittsburg, Chicago, and even Los Angeles. (yes, outside of media, LA is really a blue collar town). There will be a huge leveling of playing field for entrepreneurs and venture capitalists – that incumbents will also need to adjust and learn the new mindset.  Valley VC’s and entrepreneurs will not have a monopoly in software eating industries.

For a long time, software was viewed as an enabler and accelerant for competitive differentiation for incumbents.   And certainly many software companies were born and many many  billions were made based on this concise thesis. But as horizontal infrastructure opportunities in software become less evident and new startup software companies focus on vertical specific applications, the opportunities for outsized returns in running a pure software company have also become more scarce.  However, entrepreneurs are beginning to discover a whole new class of opportunity in combining proprietary software with new business models and processes to build companies to take on these incumbents head on. These “silicon valley-style” challengers will shower incumbents with hyper-competition, common in the technology and venture ecosystem, they have never seen in their lifetime.  Venture capitalists and entrepreneurs as we know them are moving beyond the comparably tiny addressable market opportunity in “information technology” to attack every single industry in the world.  As Marc would say, “Over the next 10 years, the battles between incumbents and software-powered insurgents will be epic. Joseph Schumpeter, the economist who coined the term “creative destruction,” would be proud.”

Riding On The Wings Of Angels, VCs Avoid The So-Called Series A Crunch

This is a guest post from my partner, erik rannala thats originally published on Techcrunch.

Much has been written about the Series A crunch that is facing entrepreneurs and their investors. Those who believe the crunch is upon us contend that a significant number of seed-funded startups will not be able to raise follow-on financing. A cursory review of the data reported recently by CB Insights would seem to support the fact that the Series A crunch is a market reality.

However, while the CB Insights data, which includes angel-funded new ventures, shows a significant increase in seed activity, the PwC MoneyTree data shows a more nuanced story. Looking at PwC MoneyTree’s almost 20 years of venture investment data (below), it turns out that the Series A crunch is a phenomenon that is disproportionately driven by, and will disproportionately impact, the bottom of the startup financing market: angel investors.

Continue Reading . . .

White Swans

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A better edited version was posted by Michael Carney (thanks Michael!) @ pando daily. Go read that one instead!

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In the past 30 days I’ve had sad and unfortunate conversations with around 5 entrepreneurs about the reality that their venture funded companies are headed toward their eventual end . . .  some are indignant, some are accepting, and others openly sad. All of them have lost the passion they once carried in their voices that I had admired just a few years ago. But if you looked in their eyes, the twinkle remains.  “I’ll be back,” they all said to me without fail.

*************

I have yet to find the investor hat either comfortable or empowering. I build products, markets, and companies. You might think I’m talking about MuckerLab, but really I’m just talking about myself, my career, my love.  For my entire life never once did I make a career decision simply based on some calculated odds of success.  It seemed cold, robotic, mercenary . . . unhuman. Perhaps that’s dumb and naïve, but I doubt Steve Jobs ever thought that hard about the probability of turning around Apple, or that FDR thought about the probability of winning WWII.  Men who achieve great things (perhaps different from great men), believed in more than math – they believed in their passion, their destiny, and their moral obligation to strive for the impossible.  Without these men, who didn’t believe in just the odds, where would all of us be? What would our lives and the human condition be? In fact, beating the seemingly impossible is the only reason we are all here. (Whether you believe in Darwin, God, or both.)

So here is the conundrum and paradox. While entrepreneurs are by definition foolhardy men and women who defy the impossible to chase their dreams, the investors who back them seem to be obsessed with weighing the odds rather than bending the odds. They (we?) think about how to mathematically optimize their portfolio size and diversification for returns in terms of chasing for the mythical billion dollar home run (also known as the black swan ) because given their multi-hundred million (or billion) dollar funds, these rare animals are really the only thing that drive an impactful financial outcome. (which help pay for their Maserati’s)   They carefully “prune” their portfolios to double down on black swans and put to bed both failed companies as well as ones that they believe will never “turn” black. Fundamentally, failed ideas deserve to fail – it’s Darwinism – but putting to bed “healthy white swans” seems like a cruel and disrespectful act.

Are investors supposed to treat entrepreneurs as just numbers, a series of bets, a stack of chips on the roulette table?  Doesn’t every entrepreneur’s dream deserve the chance to be fulfilled? While SOME venture capitalists get rich on their management fees, entrepreneurs are asked (and gladly volunteer) to empty college savings accounts, give up the most lucrative portion of their careers, live off ramen, and bet it all on black.  There is no portfolio.  There is no turning back. There is no alternative outcome. Its a game where the heroes are asked to kill King Wart with just 3 lives while everyone else gets to hit reset over and over again.

BUT venture capitalists have to answer to their investors as well – and the only outcome these investors care about are financially driven.  This is a business after all. So where is the middle ground?

We all fall in love – at the wrong time, with the wrong person, in the wrong circumstances. Sometimes a choice was made for us rather by us. And regret could be 5 to 10 years of our lives lost. Or even worse, a walk down a one way road toward an endless horizon. Ending up with an investor can be scarily similar. I try telling entrepreneurs in my unguarded moments to find venture capitalists that care about the same outcome as they do. If they will never settle for anything less than $1B, then find guys that are aiming for the home run.  If a nice fishing boat will do, don’t hook up with gals that plan to upgrade their yachts. Entrepreneurs need to surround themselves with people that respect their dreams with no judgment on the grandness of their ambitions (financially, socially, and emotionally). It is easier said than done – cause there is no level playing field.  Venture capitalists drive better cars, have more zeros in their bank accounts, and (I’m sorry) generally behave like rich douche bags more often than not.  Because the venture capitalist survival math favors those who calculate the odds, have a portfolio, and prune companies ruthlessly . . . most first time entrepreneurs will never have the leverage to find someone who respects their aspirations and dreams beyond the financial returns that it represents.

Lots of people talk about how the venture industry is broken from a financial returns perspective. I think it is broken for the people that matter the most – the entrepreneurs who empty college savings accounts, give up the most lucrative portion of their careers, live off ramen, and bet it all on black. Unfortunately we can’t all be black swans.