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From my experience I've found there are 3 types of VCs: 1. The Product VC These are people who built a great product(s) and exited and became VCs. They know t

From my experience I've found there are 3 types of VCs: 1. The Product VC These are people who built a great product(s) and exited and became VCs. They know the roller coaster of making a product successful. They can provide great advice. They can identify with the struggle and provide support. They are informed about the industry because they are inherently curious people and like to know about products. They also know what kind of person will most probably succeed in navigating the turbulent waters of a start up and bring a great product to market. These are the VCs to listen to. 2. The "I won a lottery VC" These guys made a product that for some reason (right timing, right connections, right team, product/market fit) became hugely successful quickly and they exited. They had an idea for solving a single pain point and it was the right pain point to solve. With their new found wealth they behave like @johnwheeler's Shoe Button prince. Suddenly they feel like they can pontificate on any industry. Unless your product is in the same industry that the VC exited from take what these guys say with a grain of salt. 3. The Herd VC These guys are the spray and pray variety or follow the herd variety. Both these strategies will lead them to seem like they have the Midas touch because a few of their investments will hit the blockbuster league. If you ask them what made them invest in the blockbuster they will spew the generic things. These are the guys whose money you take and ignore their advice because they really don't know what they are talking about. Their well of knowledge is shallow and wide so in your industry it won't be deep and narrow.

sickpostman 10y ago
Ahaha. I agree with one minor modification. There is a fourth type that is much more common outside of of SV, especially in New York: the "PE VC". These are guys that should've been private equity guys, and they don't have operating experience at startups, or tech companies. They have banking backgrounds. They look at deals through the lens of like "how am I teeing this up to be acquired by who?" They also retain a vestigial tendency to just look for deal volume, so they're always trying to get one little startup to acquire another one, way to early, in different businesses with different cultures and teams because of the crummiest whiteboard reasoning about strategy or synergy. Like 'this company makes speech-to-text IVR software, this company does food delivery...lets merge the two and have voice-based food delivery.' That's actually not even a bad enough example. But they seriously strongly prefer 'doing bad deals' to 'not doing deals' as if they were still living in a fee-based world. These are the VCs you avoid.
- palakchokshi 10y ago
  Indeed I forgot about the Wannabe VC :) All jokes aside you are absolutely right that these are the guys you want to avoid like the plague because they are not invested in your success or even your journey.
- mathattack 10y ago
  I would add that these PE VCs tend to view the world with Zero Sum Game lenses. (If they win, I lose) They also tend to look harder at financial engineering methods for getting value. This isn't bad in many situations, but can be counterproductive when working through issues like product-market fit.
trvlngwlbry 10y ago
One obvious exception is the very VC whose blog post you're commenting on. Fred seems to have the same qualities of "The Product VC," but has developed them despite not having exited a company before becoming a VC.
yesimahuman 10y ago
These are not the most common archetypes I've seen. Many (most?) VCs come from the finance/m&a/vc world. They have not run companies nor been on succesful product teams before. It is rare that a VC is an ex-operator, though founders want to work with them the most making them highly sought after. This explained to me the disconnect I found between how I viewed the world as a founder, and how certain VCs viewed the world as finance people.
lafay 10y ago
Isn't most of "built great products" the combination of right timing, right connections, right team, product/market fit? What really is the difference between #1 and #2?
hkmurakami 10y ago
I don't necessarily disagree with you, but I'd look at the situation with a different lens. What value does this partner bring to my board? The three I've heard of in concrete terms are (1) product decision making, (2) network and intros, and (3) operational focus. 1) is the partner who can help you figure out which features you'll need to go up market and hit the next stage of your growth. 2) is the partner who knows everyone and can open doors to sales counterpart and key hires. 3) is the partner who's a numbers guy through and through, and help you avoid operational pitfalls. If it's not clear what a VC partner is bringing to the (board room) table, then it's worth seriously considering whether it's correct to take their money. Sometimes you have no choice. But if you have a choice between cheaper money and a great value add partner in the above mold, I've almost never been told to take the cheap money. If you know of other "value add" archetypes, I would love to learn of them.
- palakchokshi 10y ago
  Another value add archetype might be the "sounding board" partner. This is the person that listens to you vent, provides moral support, gives advice on non-product related issues like personnel, politics, power plays, helps with strategy and negotiation, etc

sickpostman 10y ago

Ahaha. I agree with one minor modification. There is a fourth type that is much more common outside of of SV, especially in New York: the "PE VC". These are guys that should've been private equity guys, and they don't have operating experience at startups, or tech companies. They have banking backgrounds. They look at deals through the lens of like "how am I teeing this up to be acquired by who?" They also retain a vestigial tendency to just look for deal volume, so they're always trying to get one little startup to acquire another one, way to early, in different businesses with different cultures and teams because of the crummiest whiteboard reasoning about strategy or synergy. Like 'this company makes speech-to-text IVR software, this company does food delivery...lets merge the two and have voice-based food delivery.' That's actually not even a bad enough example. But they seriously strongly prefer 'doing bad deals' to 'not doing deals' as if they were still living in a fee-based world. These are the VCs you avoid.

palakchokshi 10y ago
Indeed I forgot about the Wannabe VC :) All jokes aside you are absolutely right that these are the guys you want to avoid like the plague because they are not invested in your success or even your journey.
mathattack 10y ago
I would add that these PE VCs tend to view the world with Zero Sum Game lenses. (If they win, I lose) They also tend to look harder at financial engineering methods for getting value. This isn't bad in many situations, but can be counterproductive when working through issues like product-market fit.

trvlngwlbry 10y ago

One obvious exception is the very VC whose blog post you're commenting on. Fred seems to have the same qualities of "The Product VC," but has developed them despite not having exited a company before becoming a VC.

yesimahuman 10y ago

These are not the most common archetypes I've seen. Many (most?) VCs come from the finance/m&a/vc world. They have not run companies nor been on succesful product teams before. It is rare that a VC is an ex-operator, though founders want to work with them the most making them highly sought after. This explained to me the disconnect I found between how I viewed the world as a founder, and how certain VCs viewed the world as finance people.

lafay 10y ago

Isn't most of "built great products" the combination of right timing, right connections, right team, product/market fit? What really is the difference between #1 and #2?

hkmurakami 10y ago

I don't necessarily disagree with you, but I'd look at the situation with a different lens. What value does this partner bring to my board? The three I've heard of in concrete terms are (1) product decision making, (2) network and intros, and (3) operational focus. 1) is the partner who can help you figure out which features you'll need to go up market and hit the next stage of your growth. 2) is the partner who knows everyone and can open doors to sales counterpart and key hires. 3) is the partner who's a numbers guy through and through, and help you avoid operational pitfalls. If it's not clear what a VC partner is bringing to the (board room) table, then it's worth seriously considering whether it's correct to take their money. Sometimes you have no choice. But if you have a choice between cheaper money and a great value add partner in the above mold, I've almost never been told to take the cheap money. If you know of other "value add" archetypes, I would love to learn of them.

palakchokshi 10y ago
Another value add archetype might be the "sounding board" partner. This is the person that listens to you vent, provides moral support, gives advice on non-product related issues like personnel, politics, power plays, helps with strategy and negotiation, etc