Optimizing the VC Career: Access, Platform, People
I’ve been having a number of conversations recently with people at various stages in their VC career. Some folks are just looking to enter the industry, and others have been investors for a while and are thinking about how to evaluate their next moves. Each of these people have been getting a bunch of different advice about how to think about their careers. It’s very tough to get a job in VC, but it’s actually even tougher to stay in the industry and build a fruitful, long career. There will likely be a number of different changes and transitions that one will face, and it’s tough to weigh all the different factors.
I’m fairly early in my venture career myself, so I certainly don’t claim to be an expert. But I have a hypothesis about what one should optimize for at different steps along the VC career. It’s somewhat counter-intuitive and contrary to some conventional wisdom. The progression I see is around first prioritizing access, then prioritizing platform, then prioritizing people and fit.
When I was first looking to get into VC, I got the typical career advice that optimizing for people and fit was the most important thing. But then I had a chat with Felda Hardymon, a professor at HBS who was also a senior partner at Bessemer. His advice was to speak to every VC firm I could about a role, and in the end, pick the the firm with the strongest track record and reputation. I think I explicitly asked him about people and fit, and he recommended that I de-prioritize that early in my career.
As I’ve reflected on that advice, my interpretation is that what’s most important in the early years as a VC is access to data. You are embarking on a career-long process of developing your investment judgement. If you think of your investment judgement like an algorithm, the quality of the algorithm is highly correlated to the quality of the data that informs it. So, early in your career, your priority should be to feed your personal investment judgement algorithm with the best possible data.
The quality of this data is itself driven by two things. 1. Does the firm have access to really great deals? Does the firm have the brand and deal flow to get in front of great entrepreneurs? 2. Will you specifically have access to these deals? Will you be part of good pitch meetings, and will you be part of high level discussions about these deals? Both of these are critical for your early learning in venture. Early in your career, you should be willing to trade off people* and platform for maximum access.
The next stage of the VC career is about building your own reputation and track record. This is the toughest stage in one’s career because you need to be able to convince founders to work with you over other, more experienced investors. You also need to be able to convince your senior partners and team members to go along with you. At this stage, the most important thing is the quality of your investment platform. I’d define this as the way your firm and your role within the firm helps you compete on deals. This is done through brand, support resources for founders, and an internal process that empowers you to move fast and decisively. I’ve seen some investors succeed here by joining firms with really strong brands so they can win deals based on that credibility. I’ve also seen other investors join firms with fairly weak brands, but ones that allow the investor to move with maximum speed and flexibility to be able to lock-in deals faster than the competition. Others stay at their own firms, but work hard to develop a personal reputation around a fairly narrow focus area or new geography. However you do it, having a platform that empowers you to compete is the most helpful thing at this stage in your career.
I believe that ultimately, working with great people that you trust, like, and respect are what will really make your time at work rewarding. Many investors are in the industry their whole careers and never quite find themselves with colleagues that they feel great spending time with. And because partnerships are long term commitments, one can find themselves stuck in a sub-optimal situation for a long time.
VC firms also largely don’t perform that well. If you are working with great colleagues, but your firm doesn’t perform, you may be happy for a while, but it certainly won’t last. So the long term challenge if finding a team that is a great fit for you AND a firm that performs at a high level. Doing this is not easy. First, you need to be the kind of partner that great investors want to work with, and share economics with. Then, you need to figure out who these people are that you want to build a long term partnership with.
So my advice is to be on the lookout for people you could see yourself partnering with down the road. You may start a firm together one day, or be in a position to recruit each other to an existing, thriving partnership. Optimizing for people that you fit with is probably the highest priority across the full length of your career. But it’s a bit of a long game, and you don’t necessarily want to optimize for people and fit early on if it means that you give up on access and platform prematurely.
*Side Notes: While I think that it may be wise to sacrifice on people and fit early in your career, what you should never trade off is your integrity. I think it was Ben Franklin who wrote that “He that lieth down with dogs shall rise up with fleas.” When I talk about trading off on people, I mean cultural or personality fit. I highly recommend against joining a firm if you know that there is going to be a mismatch on ethics and foundational values.