
Sequoia’s Doug Leone to Mike Arrington: Why You Want to Be a VC is Beyond Me - cHalgan
http://www.pehub.com/118285/sequoias-doug-leone-to-mike-arrington-why-you-want-to-be-a-vc-is-beyond-me/
======
larrys
Leone then told Arrington, “You’re joining the abundant side of market,
instead of the scarcity side of the market…Why you want to join [the world of
venture capital] is beyond me.”

Because by being a VC not only is someone else doing the work but you are
spreading around risk over many possibilities rather then investing years in 1
idea you have.

And of course it makes sense which is why many successful entrepreneurs after
their one or two hit wonders go into investing and don't start another risky
business. They only need 1 hit to stay on top and can have many failures in
the ideas they invest in.

------
ma2rten
"Too much money is already chasing startups, including from Europe, Russia,
and the likes of Goldman Sachs, Leone then told Arrington, “You’re joining the
abundant side of market, instead of the scarcity side of the market…Why you
want to join [the world of venture capital] is beyond me.”"

Is that really the case ?

~~~
michaelochurch
Demand for founders who've already been through an exit is high, because
(especially given how the past decade has been) the number of people out there
who've done an exit and are up for a second go is small. These are the people
who can raise $25 million before a launch.

Demand for unproven but capable talent is nearly zero.

------
michaelochurch
_The firm also seems to prefer investing in very young entrepreneurs. Leone
said it typically invests in people who are age 25 or younger these days.
[...]

Leone called the shift a thankful one, explaining that if you want a founder
to serve as the VP of product or in a very important technical role or as the
CEO, it’s possible to have such conversations, whereas it’s “different
conversation” with a 45-year-old founder who’s “bent on being CEO.”_

Read: We'd rather fund a young person who's thankful just to get funding and
doesn't know his rights, because it's easier to ask for onerous terms and to
boot him later.

~~~
erikpukinskis
This quote too:

 _We know after many, many years that your DNA is set in the first 60 to 90
days, and we want to be there to assist you to create some of the best DNA
that Silicon Valley has ever seen._

There seems to be a pretty obvious undercurrent of "We want to invest in
people who we can muscle around" there. I can't blame them. They're making
lots of money, so it's working. And entrepreneurs are getting their payouts
too.

But god help you if you have different goals than your VCs.

~~~
michaelochurch
_They're making lots of money, so it's working._

VC firms are making lots of 2&20\. Mostly 2. Performance for VC firms has been
poor since 2001.

------
nirvana
Maybe I'm missing something, but VCs take a management fee, correct? So, if
you raised a $200M fund, and your management fee was %5 a year, then you'd be
bringing in $10M a year before you even get started. If you have 5 partners,
that's $2M a year each.

Then, if you make some good investments, your firm gets a cut of the returns,
plus being on boards often results in stock options in the company, etc. etc.

It seems to me that being a VC is the catbird seat of leverage. You invest
other people's money and get a cut of the results.

~~~
smanek
Generally, the management fee is 2%, and you get 20% of all profit (known as
'two and twenty').

