Why All VCs Should Watch Ratatouille (Or Watch it Again)
Hello all — welcome back. I’ve missed writing for the blog and am excited to be back in all of my terribly-photoshopped movie poster glory. We’re kicking off the return of Dam Venture with a story about my favorite animated movie, Ratatouille. And its great importance to, you guessed it, venture capital.
For those who may have forgotten the plot of this excellent movie (spoiler alert, but honestly, if you haven’t seen it at this point you kinda have it coming) Ratatouille follows the life of a French sewer rat as through happenstance he becomes the mastermind behind the revitalization of one of Paris’ classic fine dining restaurants, wowing even the harshest of critics, the anti-hero of the film, Anton Ego. For the sake of convenience, we’ll forget the whole Linguini/Colette romance B-plot, rat puppeteering-human/abducting and hog-tying health inspectors, dead chef with a secret child who inherits his great fortune, rest of this beautiful, perfect, one hundred- and eleven-minute movie.
What the movie goes to show, through Remy’s trials and tribulations is that, in the words of the Anton Ego himself: “Not everyone can become a great artist; but a great artist *can* come from *anywhere*”
It’s not hard to see where that could apply to venture capital.
Frankly, Anton Ego represents many venture capitalists: old, male, and, well, without putting too fine of a point on it, white.
Although I never experienced this with anyone I worked with at Riot or Builders (and I’m extremely fortunate in that sense to have worked with forward thinking partners), I’ve seen broadly throughout the industry too many times where a big name or well-respected VCs only select for a very specific pattern. This isn’t a wide criticism either, it’s a well-known and frankly widely accepted part of the industry. They’ll look for ivy league or Stanford grads, or at the Series A they’ll look for deals where the last round was led by a specific partner at a specific firm. There’s a reason why minorities and people outside of Silicon Valley receive so many fewer venture dollars than those inside: VCs look for people who have been successful before. Which unfortunately is often people who look like them, talk like them, who went to the same alma mater or were in the same fraternity, often overlooking the fact that a great founder, or a great company, might come from anywhere. That makes it difficult if not impossible for outsiders to access funding through this assett class.
This is a critical flaw in the industry, and one we’ll expand on more over the coming months. In short though, venture capital is a business based on seeking alpha. Sure, you can look for where to identify patterns. But if you pattern match, that’s beta. To find alpha you must see the pattern and see where something is going to break into an outlier. Not everyone can become a great founder; not every business can be a great business, but a great founder or a great business can come from anywhere.
For me, the most important part of Ratatouille is that it does not place blame on Ego. He doesn’t die a villain’s death, but instead the movie shows us that even the harshest critics can have their worldviews changed for the better. At the end of the movie, Ego ends up becoming a small business investor in Remy’s new, fully rat-run restaurant. Not minding what a terrible investment that is (most rats only live 2–4 years in captivity), that transformation is quite literally what we can hope that venture capital and venture capitalists will reach. They will discover gold in an atypical founder or business model, and they will deploy their capital to help the business grow and scale. Ratatouille should not serve as a criticism of venture capital, but instead as a beacon for what it can be: an investment ecosystem where we recognize that great founders and great businesses can come from anywhere, or anyone. That’s how we’ll push the industry and the world forward.
