Perspective, Pontification and Propoganda about Entrepreneurship and Venture Capital, brought to you by David Hornik of August Capital.

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I would put this under "theory vs practice". VCs talk about finding great CEOs - in theory - but in practice I see time and time again VCs putting in, or letting slide, CEOs and other top management who have no clue how to run an organization. Many of the "serial entrepreneurs" in my experience are great at giving themselves loans, raises, and bonuses while running the company into the ground. Afterwords, they have "CEO" on their resume and can trick another VC into letting them run a company.

I think if you look at the database of VC companies for the last 10 years, you would find they don't have a good track record in picking management.

Marc H. Nathan

Most investors would rather have their companies run by a battle-tested CEO who knows where the land mines are in an industry, even if they stepped on a few themselves instead of an "expert" who may have a MBA, but no real world experience. VC's are constantly trying to find a person that "gets it" and can lead the rest of the company in the direction of the business plan. When picking a CEO, VC's are looking for an elusive quality - the ability to quickly learn the rules of the game and run with the ball. Sure there are going to be some bad people running companies, but the inept and the outright crooks are hopefully weeded out.

John Hulbert

Many years ago I worked (on contract) for a Government organisation which funded start-ups. One technically orientated start-up was causing concern as another round of funding was due. The Government depart was in liaison with a VC operation who intended to provide part of the further funding. I ran the rule over the operation, after which the VC president rang me. I had found that the management though probably good for a small concern was naive and too weak for a scaled up operation, but I had not yet reported this.

The VC interrogation went something like this. "Well lets start with the important things, what is the MD (Managing Director) like", I said slowly and somewhat defensively "Well". He interrupted and said "OK, so we need an new MD".

Harsh, arbitrary, but absolutely right. Frequently you can walk into a company, and without any due diligence, know if it is right or wrong. It may be gut feeling, compiled knowledge but you need to take notice of it.

John Hulbert

Sorry the email address on the last post was wrong (an old entry remembered by my computer).The correct address is

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