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One problem: there's a lot of crossover between investment banking and venture capital. Although the fact is appalling, it's easier to get a VC job with an IB g

One problem: there's a lot of crossover between investment banking and venture capital. Although the fact is appalling, it's easier to get a VC job with an IB gig and an MBA than with 4-10 years of experience in technology. So you have a lot of the same people. VC would be a lot better-run, however, if it recruited technology people instead of ex-bankers.

byrneseyeview 17y ago
The industry has been around for a very long time, and it still has a pretty strong B-school flavor. Maybe MBAs are way better at getting capital, even if they make worse investments. That might be a way to restate the problem, and it points to the same solution many startups arrive at: have a suit or two on staff, if only to communicate with the other suits who have so much money.
- pw0ncakes 17y ago
  The industry has been around for a very long time, and it still has a pretty strong B-school flavor. You'd think that this would be a candidate for change, given that the industry is losing money. However, I don't expect ever to see it happen. Even though MBA culture is anachronistic and less-than-useless, it persists because it convinces a set of people who can't actually do anything that they deserve to be the High Priests of the economy.
  - byrneseyeview 17y ago
    That's true. The thing is, if I see why an industry should change, but notice it hasn't changed, there are only two conclusions I can reach. Either: a) My analysis is flawed, or b) I've discovered an opportunity to profit. I tend to assume a), if only because b) takes more work.
    - pw0ncakes 17y ago
      Not necessarily on B. I'm more talented than 99% of people in finance, including the major decision makers. However, that doesn't give me an "opportunity to profit". We're talking about VC here, which requires a huge cash base before it converges. I don't have one.
      - byrneseyeview 17y ago
        No, that goes back to a). It's a moot point to say that you'd be a good venture capitalist, if only you had money, but that the characteristics that get someone VC-level money also make them bad VCs. The MBA who can raise a $100 million fund is clearly a better VC than you, even if you're more talented, because he's actually a VC.
        pw0ncakes 17y ago
        That has everything to do with connections (e.g. accidents of history, in many cases before many of us were born) and nothing to do with personal merit.
        byrneseyeview 17y ago
        "Everything" and "nothing" are pretty strong terms! Good connections obviously help people raise money, which helps them make investments, which is what makes them VCs. But I've never met a dumb VC, and the only "lazy" ones I meet are better described as "efficient." The VC's job is to raise money, invest it in promising companies, and help them realize the maximum possible value of that investment. Being good at the last two is nice, but being unable to raise money would make it pretty tough for you to become an investor.
joshu 17y ago
Having been (or been close to) all of the above types, I'm pretty sure this isn't correct. You actually want someone who has 1) an eye for the future 2) an understanding of risk 3) a clue as to how to run companies and 4) the ability to say no.
- drunkpotato 17y ago
  I also want a pony. Those are all rare qualities individually, together they are more rare. I'd be interested to know which probability is higher: the probability that one has those qualities given that one works closely with technology, or the probability that one has those qualities given that one has an MBA.
- pw0ncakes 17y ago
  Investment banking, at least at the analyst level, is for mediocrities willing to do anything to make money. So you're not likely to find those traits in them. I'm not saying that MBAs don't add value. If technology people went into MBA programs, they would by virtue of exposure to other technical people if nothing else. However, so long as so many MBAs are people who were bankers out of college... most of their graduates are going to be mediocrities.

byrneseyeview 17y ago

The industry has been around for a very long time, and it still has a pretty strong B-school flavor. Maybe MBAs are way better at getting capital, even if they make worse investments. That might be a way to restate the problem, and it points to the same solution many startups arrive at: have a suit or two on staff, if only to communicate with the other suits who have so much money.

pw0ncakes 17y ago
The industry has been around for a very long time, and it still has a pretty strong B-school flavor. You'd think that this would be a candidate for change, given that the industry is losing money. However, I don't expect ever to see it happen. Even though MBA culture is anachronistic and less-than-useless, it persists because it convinces a set of people who can't actually do anything that they deserve to be the High Priests of the economy.
- byrneseyeview 17y ago
  That's true. The thing is, if I see why an industry should change, but notice it hasn't changed, there are only two conclusions I can reach. Either: a) My analysis is flawed, or b) I've discovered an opportunity to profit. I tend to assume a), if only because b) takes more work.
  - pw0ncakes 17y ago
    Not necessarily on B. I'm more talented than 99% of people in finance, including the major decision makers. However, that doesn't give me an "opportunity to profit". We're talking about VC here, which requires a huge cash base before it converges. I don't have one.
    - byrneseyeview 17y ago
      No, that goes back to a). It's a moot point to say that you'd be a good venture capitalist, if only you had money, but that the characteristics that get someone VC-level money also make them bad VCs. The MBA who can raise a $100 million fund is clearly a better VC than you, even if you're more talented, because he's actually a VC.
      - pw0ncakes 17y ago
        That has everything to do with connections (e.g. accidents of history, in many cases before many of us were born) and nothing to do with personal merit.
        byrneseyeview 17y ago
        "Everything" and "nothing" are pretty strong terms! Good connections obviously help people raise money, which helps them make investments, which is what makes them VCs. But I've never met a dumb VC, and the only "lazy" ones I meet are better described as "efficient." The VC's job is to raise money, invest it in promising companies, and help them realize the maximum possible value of that investment. Being good at the last two is nice, but being unable to raise money would make it pretty tough for you to become an investor.

joshu 17y ago

Having been (or been close to) all of the above types, I'm pretty sure this isn't correct. You actually want someone who has 1) an eye for the future 2) an understanding of risk 3) a clue as to how to run companies and 4) the ability to say no.

drunkpotato 17y ago
I also want a pony. Those are all rare qualities individually, together they are more rare. I'd be interested to know which probability is higher: the probability that one has those qualities given that one works closely with technology, or the probability that one has those qualities given that one has an MBA.
pw0ncakes 17y ago
Investment banking, at least at the analyst level, is for mediocrities willing to do anything to make money. So you're not likely to find those traits in them. I'm not saying that MBAs don't add value. If technology people went into MBA programs, they would by virtue of exposure to other technical people if nothing else. However, so long as so many MBAs are people who were bankers out of college... most of their graduates are going to be mediocrities.