Fred Wilson has today’s great VC blog post up titled I Got Lucky. It’s the story of how Fred got into the VC business – going back to 1986.
I met Fred in 1996 the same day I met Seth Godin at Yoyodyne (which ended up being the first investment out of Fred’s new fund – Flatiron Partners.) Fred and I have been good friends since and I count him as one of my favorite people on the planet to work with. While it’s fun to read the story, the punch line is powerful and important for anyone that wants to get into the venture capital business.
If you want to be a top tier venture investor, you must be recognized as one of the experts in the field you invest in. When I was at Euclid, I used to watch in admiration as guys like Bill Kaiser worked the enterprise software business or Paul Ferri worked the communications equipment business. They knew the business cold and if you wanted to start a company in their area of expertise you went to them first. That’s what you have to get to if you want to make top tier returns in the venture capital business.
The way you do that is you work for at least ten years in the industry, getting operating experience, building a killer rolodex, and learning how the business works from the inside. Then in your mid to late 30s, you can make the move to the venture capital business, as a partner, not as a wet behind the ears associate who doesn’t know anything other than how to push numbers around a spreadsheet.
I did it all wrong and got lucky. I don’t recommend anyone reading this to try it the way I did it. If you choose to get an MBA, get a real job out of business school. Help to build a few businesses in an industry sector you really like. Become an expert in that industry. Then try your hand at venture capital. You’ll be much better at it than I was my first ten years in the business.
And don’t forget – eat your wheaties.