VC is a team sport
The venture business has a lot of folks who talk a good game…but this is because it is in fact a humbling game. The LPs who invest in venture funds want awesome returns but very few VCs deliver them. Most venture firms are lucky to have even one great investing partner…yet even these rare groups force the LPs who invest in them to buy “the bundle” of multiple partners rather than the true money-makers.
At the same time, the truly great firms understand VC is a team sport. Want to know which firms keep winning generation after generation? They are the ones with a system that creates multiple winning partners. And the firms that decline are those that operate like it’s a game of a King and pawns who support the King. Unfortunately, this is the norm more than the exception.
I had the opposite problem of “King and pawns” when I was getting started in the business. I had to convince LPs to invest in a “single GP” fund with a crazy new strategy. My track record was a series of multiple zero billion dollar exits.
When I was raising money to get started in the venture business, I already knew that I wanted Ann to join me in this crazy experiment (it’s a long story as to why…for another post) but I could not say this to my investors at the time because I didn’t know if she would do it. Plus, I felt it was a bad idea to declare a Partner just for the purposes of raising money. NEVER Partner with someone just to raise money. Partner with someone because you think that person is awesome by your own definition of awesome. Trust me on this one.
At the time I approached her, Ann wanted to be a founder of a “venture-backed startup.”
I said to Ann “This is even better.”
“You should start this with me because I’m a backed-venture startup.” Much to my surprise, it kinda made sense.
Keep in mind that at the time, Ann’s GP commitment was more money than her management fees at our new fund. Her salary was literally negative. Her husband, Al, often asked “How does that work?” But I kept saying. “We are going to go all the way with this thing. Mark my words.”
Sometimes crazy works. Ann took the plunge and decided to trust it would all work out.
Here we are less than ten years later and she has made some legendary investments like Lyft, Ayasdi, Xamarin, and Refinery29. And today she was recognized as a member of the Forbes Midas List.
And I don’t think either one of us could have imagined that she would be on the Yale Investment Committee. Although she is a Yale alum through and through I don’t think she would have ever even met Dave Swensen without taking a crazy risk. How awesome is that? I think I might have actually under-represented the potential, but only because I did not fully realize how awesome she would be. In the end, I was the real winner when she took the plunge.
Ann- I’m glad you took the crazy bet. And I’m equally grateful to those early LPs who had the confidence I would find an awesome partner to work with.
In the meantime, Arjun and Ryan - as the newest members of the team, you are next. Awesome surprises for you and our investors ahead. After all, VC is a team sport.