Roger Ehrenberg of Information Arbitrage Capital recently wrote a great post entitled: For the Good of the NYC Venture Scene I’d like to See…
Roger’s a great dude and I think he made some excellent points. Here’s my take, or at least part of it…
NYC needs a new narrative. (And yes, I think the narrative itself is quite important.)
The central question to this narrative is: Who’s the hero of the startup universe? Is it the entrepreneur, or is it the investor?
My first heroes were Fred Wilson and Chris Dixon. They were so smart and they had these great blogs that let me tap into their brains and absorb knowledge. It was great to have that kind of access. Like a lot of peeps in NYC, I quickly became a fanboy. (Still am, actually.)
Over time, I realized that this VC-centric narrative had a pernicious side-effect: Because they were my heroes, I started to think that getting on Fred Wilson/Chris Dixon’s radar was the coolest thing I could possibly do. And more generally, instead of focusing on solving customer problems and creating a kickass product, my main goal––my raison de etre––started to become getting investors to know and like me.
I think the same thing happens to a lot of entrepreneurs. And I think it’s a bad thing. In the entrepreneurial ecosystem, I think there’s a general overemphasis on the role and importance of investors. The reasons for this are perfectly understandable: Investors have an incentive to self-promote and build a strong personal brand. Founders don’t, or at least they typically don’t appreciate the ROI.
The result is that the newbie coming into the startup scene gets lots of exposure to the the mind and (virtual) conduct of investors and very little exposure to the thinking and lifestyle of individual entrepreneurs. This is reinforced when journalists (who face the same discovery problem as everyone else) end up filling their startup-related articles with quotes from VCs.
This does not mean that VCs and journos are bad people. Hardly.
But it makes people want to be VCs, not entrepreneurs. And that is bad.
The goal of my rants is to get people to think a little differently about the problem and maybe, just maybe, start to see entrepreneurs and themselves in a different light. I want my rants to serve as a countervailing influence to the VC-centric mindset that inevitably rubs off on us all, the best included. And really without entrepreneurs, there is no startup scene. Period.
Venture capital is like baby food––it’s something that helps startups grow. It feeds startups and founders. But because of the self-promotion/incentive problem I described earlier is compounded by the fact that the demand for startup capital almost always exceeds the supply of it, people end up focusing on and worshipping the people who control it––they make the venture capitalists themselves the focus of the startup universe.
For some startups, VCs really are their customers. Until recently, this was Twitter…and Tumblr…and, yeah, lots of folks. Some startups can even exit without making a dime of revenue, so maybe this is not 100% a bad thing.
However, generally speaking, having investors as your customers is a bad thing. A healthy village, a healthy startup ecosystem, a healthy New York is one in which the most ambitious people WANT TO START COMPANIES that change the world, disrupt huge markets, and alter how we live as human beings.
In a healthy startup scene, the founder is the hero. Maybe this will be Dennis Crowley’s next act. Maybe Avner Ronen will step up to the plate. Maybe….it’ll be someone else. Regardless, we’re not there yet. This is bad. I want to change that.
I believe that a big part of the way you get there is to change the narrative. It’s important. Or at least it was for me.
UPDATE: Seems like there confusion as to what I’m advocating for, so I’ll clarify. I’m NOT saying that Fred or Chris (whose blog personality is a lot more investor than entrepreneur) should go away or stop doing what they’re doing…at all. They are good dudes doing great things and yes, calling attention to the scene, which is good. It’s not at all a zero-sum game. What I am calling for is not “take Fred/Chris down a notch,” but rather “bump entrepreneurs up in the hierarchy.”