I recently had lunch with a venture capitalist that I know well, and I did not have indigestion after lunch with someone who funds startups.
Alexander Dubcek, leader of Czechoslovakia during the 1968 Prague Spring, himself a devoted Socialist, coined the phrase "Socialism with a human face,” as warning to unyielding Stalinists running dictatorships behind the Iron Curtain. His humanistic outlook earned him the center stage during the Velvet Revolution a couple of decades later to do away from the rule of few over many.
Not that venture capitalists are cut from a Communist mold, but the old self-righteous and overbearing scheming of the two resemble. After my lunch, I could not but wonder if I just witnessed venture capitalism with a human face.
Mark Twain said, "all generalizations are false, including this one.” In the same vein of thought, bunching all venture capitalists in one branch is not right. But, the Twainian tale would be that it might not be far off the mark if evidence abounds. Exceptions exist, no doubt. But the pattern is also revealing.
In the Bay Area, we live in a corner of the world that is largely shaped by the role that venture capitalism has played during the past few decades. Chances are that our lives at one point or another were impacted by the local technology and life-sciences venture capitalism. Our perspective is shaped by that experience and our views are strong.
Yet even in the Bay Area, the myth continues to cover venture capitalism. As a tight-knit community, anecdotal tales prevail more than actual facts. We then naturally rely on our own experience as the true picture. Although that picture can often be blurred by biases, one-time experience or second-hand hearsays, it can also be an accurate reflection of reality.
My experience with the local venture capitalists started negatively. I have to admit though over the years that experience has evolved for the better, to the point I actually believe venture capitalism with a human face can exist.
One of my early meetings with a local venture capital firm resembled an encounter of the worst kind with a couple of Darth Vaders. I was warned about the crude ways that firm operated, but what I witnessed during that meeting raised the level of infamy to new heights. Accompanied by a group of highly-accomplished industrials who held senior executive roles and accustomed to tough situations and difficult people, we went in expecting serious and challenging talks, but came out shell-shocked.
We witnessed nothing short of bizarre. One partner walked into the meeting after making us wait for a long time, with his coffee in hand, and offering us none. The other partner showed up halfway through the meeting, with his cookies, eating with his mouth open, and offering his cookies to his partner only. I thought for sure this dude was one chip short of being a baked chocolate cookie himself.
The way they carried the discussion was not any better than their manners. They continually substituted discussing complex technical issues, market opportunities and business risks with how full of themselves they were.
My colleagues requested not to have anything to do with those two, citing the proverbial life is too short to spend working with these people.
Whether those two were not fortunate to have someone teach them manners, or it was a part of their repertoire of intimidation to demonstrate they were tough, compensating for in fact being semi-tough, I would not know.
The damage was not limited to a meeting like that. We later brought in a bright, newly-minted MBA from one of the most prestigious business schools, and sadly he had interned at another venture capital firm also known for shenanigans. As a young and impressionable associate, he mistook the crudeness he observed at that firm as standard modus operandi of business. It didn’t take us long to let him go and advise him to grow up fast if he ever wanted to have a career other than working on the dark side of the Valley.
Commercial banking was not that different before the Great Depression. During the 1920s, bankers were known for their offensive manners and unrefined boorishness toward customers. But the entire banking system got it that as customers go away, so do they not far behind. Bankers then became professionals.
When the technology bubble burst more than a decade ago, it was an awakening for the Valley’s venture capital community. The excesses of the ’90s, added with embracing crudeness and rudeness as values, created a situation that took the obnoxious behavior of venture capitalists beyond urban legends.
The relatively-sudden change of fortunes of that community, and the negative take on venture capitalists, changed the community for the better. Now there are professional and pleasant individuals in venture capitalism as compared to the jokers of the past.
Oscar Wilde said, "experience is simply the name we give our mistakes.” We can hypothesize that this pleasantly-humanistic countenance of venture capitalism is due to the misguided ways of the past.
Jahan Alamzad is managing principal of CA Advisors. He lives in San Carlos.