(This is a snapshot of my old weblog. New posts and selected republished essays can be found at raganwald.com.)
Saturday, April 07, 2007
A Venture Capitalist passes away peacefully, and...
After a long and profitable life, a venture capitalist passes away peacefully in his sleep. To his surprise, death is not the end and his spirit hovers like an invisible ghost as his family grieves. He is pleased to see so many friends and business partners from the industry attend his funeral, and the eulogies are touching.
“I have lived a worthy life,” he thinks, “but it’s time to let go. I am ready.” With that thought, he finds himself sinking deep into the earth, through rock and magma, until he reaches a series of caverns, lit by an eerie glow. He sinks through the first and second levels, then alights in the third.
The Reckoning
He is facing an ancient writing desk, ornately carved. Seated at the desk, and brandishing a feather quill, is a man who appears (from what he can see) to be in great shape. He could effortlessly paste a drive 500 yards straight down the fairway. His eyes are pure white, with neither irises nor pupils.
“I have been waiting for you,” the man says, kindly, “you have served me well and earned your reward.”
Well, the venture capitalist isn’t quite expecting this. Quite honestly, he always thought that there was no afterlife, and he isn’t quite sure if this is real, a nightmare, or a few neurones flickering as his brain chills, but if there is a kind of afterlife, it may as well be the one his parents lectured him about. Unfortunately, he seems to have wound up in the Bad Place, but he made his fortune in life by turning situations around, and he puts a brave face on it.
“Umm, sure, pleased to meet you at last.”
The white eyes half close, then turn down to a scroll on the desk marked with an ancient writing. The man purses his thin, obsidian lips and speaks.
“I accept your service. Proceed to Venture Capitalist Hell.”
Well, that’s the sentence, but devils do not materialize to flay his skin and the room is comfortably warm but not hot, so maybe things aren’t as bad as people say. Perhaps he can make a few discrete inquiries, maybe volunteer to help with deal flow, even talk someone else into exchanging places with him. One, two centuries at the most and he’ll be out of this place.
He hasn’t moved, and while the lips do not move, the voice speaks again.
“Through the archway, down the hall, door on the left.”
Our venture capitalist is about to ask, “what archway?” but he realizes that there is an archway in front of him and that there has always been an archway in front of him. It all feels very dream-like, especially as he seems to float down a passage that reminds him of his offices on Sand Hill Road. It’s a broad, opulent hallway with fashionable lighting decorated with “tombstones,” the Lucite trophies of successful business deals.
At the end of the hallway there is a massive picture window and a door on either side. Through the window he can see blue sky and clouds, and without looking directly he is suddenly certain that they are on the top floor of the tallest and most prestigious business tower in the biggest and most powerful business city on this or any world. He knows without question that people who have lived lesser lives enjoy their rewards beneath his feet, and this just and proper.
“This is more like it,” he thinks. Although he didn’t really believe in such things, if there’s a choice in the matter, it’s better to reign in Hell than to serve in Heaven. Maybe he could learn a few things. Going by the legends, his new boss is the undisputed champion of devious term sheets.
He alights again, and opening the door on the left, peeks in.
VC Hell
It is an enormous conference room, so enormous than there appear to be an infinite number of board meetings going on simultaneously. He listens in with a growing sense of dread. Every single deal is going bad.
In one meeting, VCs are looking at the trends and realizing that companies are—and this is pure sacrilege—starting up without raising money! In another, the founders are laughing and celebrating actual revenues: they don’t need to raise a second round, and what will it take to buy their VCs out?
In another meeting, government officials are doing unspeakable things to the tax code. Why, they are tying tax breaks to the creation of jobs. Those Mandarins are actually expecting companies to grow the economy instead of just being shells for buzzword-compliant press releases!
And—this is too much—one pair of founders are shuttering their unsuccessful ventures and putting their patents and code into the public domain instead of merging together, raising a diluting round, and spending the proceeds on public relations and an expensive VP of Sales.
It’s all unspeakably horrible and he knows with certainty that he really is in Hell.
He gulps and looks around. There is nobody in the hallway and nobody has noticed him. He shuts the door carefully. He needs to get out of there, and he can’t go back to the man at the desk. What about the other door?
He carefully opens the door on the right and peeks in. This is much better! It’s another enormous conference room, and there is another infinitude of board meetings. But these meetings are going the right way!
Behind the other door
In one meeting, founders are supplicating themselves in the hope of getting funded. And the VCs are responding appropriately: “How will you make money if Google, Yahoo!, and Microsoft merge and devote their 40,000 engineers and $100 billion in cash to putting you out of business? What will you do if the entire Internet goes down? How do you know that someone won’t get a patent on binary logic?” The hapless founders are actually crying. This is great.
In my twenty years of business experience, Growing a Business is absolutely the best book on founding and running a business organically that I have ever read. And I read a lot of books. “Growing a Business” is not about scoring business coups or raising money. It is not about sales tactics or innovation. It is about growing a business step by step, customer by customer. It is about expanding at a sane rate and getting rich the old-fashioned way: one satisfied customer at a time.
Growing a Business is a must-read for anyone who wants to build a business rather than “do a deal.”
Unbelievably, it gets better. Nearby, a VC is toying cruelly with a portfolio company, demanding that they partner with other companies in her portfolio and add expensive buzzword compliance to their offering, for no other reason than to legitimize her investment in companies producing those very same buzzwords. And the founders are nodding gratefully, as if it was in their best interests!
And another VC is complaining that although the company is hitting every engineering deadline, they don’t have enough metrics. He demands that they start shopping for some “grey hair” to supervise engineering. They need “adult supervision” in the form of an industry veteran with a long list of failed and bloated projects on their resumé to show them what they’re doing wrong and shake everything up before it’s too late and they ship a product.
Are the founders arguing? Noooo, they’re listening respectfully, and all the while the VC is charging them a management fee for the time he spends telling them what to do. This is just great, our VC thinks, how much better can it get?
In one corner the VCs are agreeing that a company needs “a professional profile.” They are stuffing the company with HR, PR, and Business Development, all front jobs for the VCs’ lovers and mistresses. Everyone knows that jobs without performance metrics or quotas exist so that companies will be forced to dilute themselves sooner, and the founders are just sitting there and taking it while their burn rate triples.
Our VC practically wets himself with glee. Just a few months before his demise he had spent nearly an hour convincing a company in his portfolio to hire a marketing firm that happened to be run by his personal trainer and full-release masseuse. Here in Hell VCs could do as they please!
Well, does he need to hear more? Does he need to see the comely “assistant investment bankers” hired to satisfy the VC’s every need in exchange for directing public offerings to the bank? Does he need to watch as the photographers take yet another “Man of the Year” cover photo? No, this is great. There must have been some mistake at the desk, this is the place for him.
He swings the door wide open and prepares for the adulation and welcome he deserves. He is ready for his just reward.
But as he does so, there is a clap of thunder and the hallway shakes. A booming voice rings out:
“You belong to Venture Capitalist Hell. Don’t go in there, that’s Sbhaqre Uryy!!”
After a long and profitable life, a venture capitalist passes away peacefully in his sleep. To his surprise, death is not the end and his spirit hovers like an invisible ghost as his family grieves. He is pleased to see so many friends and business partners from the industry attend his funeral, and the eulogies are touching.
“I have lived a worthy life,” he thinks, “but it’s time to let go. I am ready.” With that thought, he finds himself sinking deep into the earth, through rock and magma, until he reaches a series of caverns, lit by an eerie glow. He sinks through the first and second levels, then alights in the third.
The Reckoning
He is facing an ancient writing desk, ornately carved. Seated at the desk, and brandishing a feather quill, is a man who appears (from what he can see) to be in great shape. He could effortlessly paste a drive 500 yards straight down the fairway. His eyes are pure white, with neither irises nor pupils.
“I have been waiting for you,” the man says, kindly, “you have served me well and earned your reward.”
Well, the venture capitalist isn’t quite expecting this. Quite honestly, he always thought that there was no afterlife, and he isn’t quite sure if this is real, a nightmare, or a few neurones flickering as his brain chills, but if there is a kind of afterlife, it may as well be the one his parents lectured him about. Unfortunately, he seems to have wound up in the Bad Place, but he made his fortune in life by turning situations around, and he puts a brave face on it.
“Umm, sure, pleased to meet you at last.”
The white eyes half close, then turn down to a scroll on the desk marked with an ancient writing. The man purses his thin, obsidian lips and speaks.
“I accept your service. Proceed to Venture Capitalist Hell.”
Well, that’s the sentence, but devils do not materialize to flay his skin and the room is comfortably warm but not hot, so maybe things aren’t as bad as people say. Perhaps he can make a few discrete inquiries, maybe volunteer to help with deal flow, even talk someone else into exchanging places with him. One, two centuries at the most and he’ll be out of this place.
He hasn’t moved, and while the lips do not move, the voice speaks again.
“Through the archway, down the hall, door on the left.”
Our venture capitalist is about to ask, “what archway?” but he realizes that there is an archway in front of him and that there has always been an archway in front of him. It all feels very dream-like, especially as he seems to float down a passage that reminds him of his offices on Sand Hill Road. It’s a broad, opulent hallway with fashionable lighting decorated with “tombstones,” the Lucite trophies of successful business deals.
At the end of the hallway there is a massive picture window and a door on either side. Through the window he can see blue sky and clouds, and without looking directly he is suddenly certain that they are on the top floor of the tallest and most prestigious business tower in the biggest and most powerful business city on this or any world. He knows without question that people who have lived lesser lives enjoy their rewards beneath his feet, and this just and proper.
“This is more like it,” he thinks. Although he didn’t really believe in such things, if there’s a choice in the matter, it’s better to reign in Hell than to serve in Heaven. Maybe he could learn a few things. Going by the legends, his new boss is the undisputed champion of devious term sheets.
He alights again, and opening the door on the left, peeks in.
VC Hell
It is an enormous conference room, so enormous than there appear to be an infinite number of board meetings going on simultaneously. He listens in with a growing sense of dread. Every single deal is going bad.
In one meeting, VCs are looking at the trends and realizing that companies are—and this is pure sacrilege—starting up without raising money! In another, the founders are laughing and celebrating actual revenues: they don’t need to raise a second round, and what will it take to buy their VCs out?
In another meeting, government officials are doing unspeakable things to the tax code. Why, they are tying tax breaks to the creation of jobs. Those Mandarins are actually expecting companies to grow the economy instead of just being shells for buzzword-compliant press releases!
And—this is too much—one pair of founders are shuttering their unsuccessful ventures and putting their patents and code into the public domain instead of merging together, raising a diluting round, and spending the proceeds on public relations and an expensive VP of Sales.
It’s all unspeakably horrible and he knows with certainty that he really is in Hell.
He gulps and looks around. There is nobody in the hallway and nobody has noticed him. He shuts the door carefully. He needs to get out of there, and he can’t go back to the man at the desk. What about the other door?
He carefully opens the door on the right and peeks in. This is much better! It’s another enormous conference room, and there is another infinitude of board meetings. But these meetings are going the right way!
Behind the other door
In one meeting, founders are supplicating themselves in the hope of getting funded. And the VCs are responding appropriately: “How will you make money if Google, Yahoo!, and Microsoft merge and devote their 40,000 engineers and $100 billion in cash to putting you out of business? What will you do if the entire Internet goes down? How do you know that someone won’t get a patent on binary logic?” The hapless founders are actually crying. This is great.
In my twenty years of business experience, Growing a Business
is absolutely the best book on founding and running a business organically that I have ever read. And I read a lot of books. “Growing a Business” is not about scoring business coups or raising money. It is not about sales tactics or innovation. It is about growing a business step by step, customer by customer. It is about expanding at a sane rate and getting rich the old-fashioned way: one satisfied customer at a time.Growing a Business
is a must-read for anyone who wants to build a business rather than “do a deal.”And another VC is complaining that although the company is hitting every engineering deadline, they don’t have enough metrics. He demands that they start shopping for some “grey hair” to supervise engineering. They need “adult supervision” in the form of an industry veteran with a long list of failed and bloated projects on their resumé to show them what they’re doing wrong and shake everything up before it’s too late and they ship a product.
Are the founders arguing? Noooo, they’re listening respectfully, and all the while the VC is charging them a management fee for the time he spends telling them what to do. This is just great, our VC thinks, how much better can it get?
In one corner the VCs are agreeing that a company needs “a professional profile.” They are stuffing the company with HR, PR, and Business Development, all front jobs for the VCs’ lovers and mistresses. Everyone knows that jobs without performance metrics or quotas exist so that companies will be forced to dilute themselves sooner, and the founders are just sitting there and taking it while their burn rate triples.
Our VC practically wets himself with glee. Just a few months before his demise he had spent nearly an hour convincing a company in his portfolio to hire a marketing firm that happened to be run by his personal trainer and full-release masseuse. Here in Hell VCs could do as they please!
Well, does he need to hear more? Does he need to see the comely “assistant investment bankers” hired to satisfy the VC’s every need in exchange for directing public offerings to the bank? Does he need to watch as the photographers take yet another “Man of the Year” cover photo? No, this is great. There must have been some mistake at the desk, this is the place for him.
He swings the door wide open and prepares for the adulation and welcome he deserves. He is ready for his just reward.
But as he does so, there is a clap of thunder and the hallway shakes. A booming voice rings out:
“You belong to Venture Capitalist Hell. Don’t go in there, that’s Sbhaqre Uryy!!”
Comments on “A Venture Capitalist passes away peacefully, and...”:
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Thanks, Cédric!
Many years ago, I read David Ogilvy’s classic Ogilvy on Advertising. In it, he said that people look at the picture, read the headline, then the footer, then the call-outs for any article or advertisement before reading the body copy.
Thus, I try to make sure that the last sentence doesn’t give anything away to someone who glances at it.
Many years ago, I read David Ogilvy’s classic Ogilvy on Advertising. In it, he said that people look at the picture, read the headline, then the footer, then the call-outs for any article or advertisement before reading the body copy.
Thus, I try to make sure that the last sentence doesn’t give anything away to someone who glances at it.
Doesn't work so well online, Reg. You gotta figure the screen size into it: in newspaper, your whole story can be above the fold, but here, only the first third is.
# posted by 
: 9:56 PM
: 9:56 PM
Anonymous:
Why worry? Eventually you scroll down to where you can see the end and see that it's the end. And if you peek ahead, you won't accidentally read a spoiler.
Or am I missing what doesn't work on line?
Why worry? Eventually you scroll down to where you can see the end and see that it's the end. And if you peek ahead, you won't accidentally read a spoiler.
Or am I missing what doesn't work on line?
Well, the 'picture, headline, footer, callout' trick. It only works when they are all on the same page / side of the fold. You don't have to worry about it when you're in the side column.
# posted by : 4:37 AM
: 4:37 AM
Why the third level? That's gluttons. I think you meant to have him land in the fourth circle, for avarice.
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