October | 2013 | Venture Evolved

Engineer or Consultant interested in VC? READ THIS FIRST.

Oct 27 2013

In my mind, I am still a software engineer at the core even though I have spent much more of my professional career as a venture capitalist. I taught myself how to program when I was 13 years old on my Epson Equity I+ that I bought with my Bar-Mitzvah money. I spent an embarrassing portion of my childhood and college in the late 1980s and early 1990s in front of a computer. I was a nerd before it was cool to be a nerd.

My early professional career was in consulting where I played a very technical role. After business school, I had the good fortune to wind up as a venture capitalist. But the transition from being a software engineer and/or consultant to a deal-oriented environment was very difficult. If you are an engineer/consultant and are interested in venture capital, here are some thoughts on making the transition. The worlds are so different:

Software is deterministic. It works or it doesn’t work. VC deals are murky at their most clear, and very little is +5 volts or 0 volts.
Me and machines, we get along. In consulting you learn to work in teams and with people but the relationships with clients for the most part have an expiration. In venture, you are married to the founding teams and senior management and the relationships are not defined by a project. Average time to an exit for an early stage business is 7 years. Very few consulting projects are more than two years.
I was on some software engineering projects that were emotionally, technically and professionally challenging. But none of them was a fraction of the volatility that one experiences side by side with entrepreneurs where often you find yourself on the brink of failure and success at the same time.
Engineering requires planning, scheduling, and coordination. Priorities change but nowhere near as fast as in a deal oriented environment. It was rare to junk huge sections of code. But deals take twists and turns and sometimes you have to walk away from a lot of work which can be frustrating, even when you know it’s a sunk cost.

I think engineers, especially software engineers, make great venture capitalists. Hopefully for those engineers or consultants out there looking to get into the venture capital business or are starting out, this list will provide you some empathy and comfort and perhaps help you muddle through the transition faster. And that you aren’t alone in wondering WTF.

Quote

Oct 25 2013

I think it is fitting to start with a quote from Brigadier General Georges Doriot, who many (including myself) consider as the father of modern venture capital. He was a French immigrant to the US who serve din the army and rose to the rank of Brigadier General (1 star) during WWII. After the war, he started American Research and Development Corporation, the first publicly-traded venture capital firm. It was formed with the goal of encouraging investment in businesses run by returning soldiers. ARDC wound up investing in Digital Equipment Corporation (DEC) which eventually returned 5,000x (not a typo) to ARDC. The fact that ARDC was public eventually gave rise to its undoing, but not before General Doriot was a huge success and an industry was born. Georges eventually went on to found INSEAD business school. I think his quotes are classic, and I’ll kick off this series with one of my favorites:

“Too many bankers and counselors have forgotten the history of the early years of our industrial giants of today. The first fifteen years of companies and of human beings are very much alike: hope, measles, failures, mumps, reorganizations, scarlet fever, executive troubles, whooping cough, etc. are parts of one’s daily life. Hopes, disillusions, hard work, are all necessary, particularly during the first ten or fifteen years before a stable and healthy body or corporation can begin to exist.”

Snipes, the Game That Gave Birth to LANs

Oct 22 2013

When I was in high school, I took the one programming class that was offered. We had a nice computer lab with IBM PS/2s that ran on a Novell LAN. The class was taught in Pascal which I knew somewhat from running open source software called Forum for my BBS. Back in those days, LANs were a very new thing.

To save money, our teacher, Mr. Smith, installed the Borland Turbo Pascal 3.x compiler on the server. My guess is that he didn’t have to pay for more than one license that way. Or that he was supposed to pay for more licenses but just conveniently didn’t.

Archive - October 2013