So when Chamath, who is a good friend and a great investor, says: “”I would bet a large amount of money that the overwhelming majority of us [venture capitalists] would not look favorably on a company started by one of you [Harvard MBAs].” – I’ll just throw out that the door is open at Matrix.
Subscribers from my VC Careers email list (you can subscribe from this page) often email me asking for advice about how to get their first VC job. Below is one such email from a PhD student who is hoping to work in VC. I’ve responded to his questions below in bold.
Following your suggestion, I have recently had an informational intervew/conversation with a managing partner of a VC firm. The overall feedback is good, I felt that he is happy with my qualifications (PhD in —-, and currently working in a —-). Now I have two questions emerged after this conversation, and I think your insights would be very much appreciated on them:
1) The partner said that his firm only hires junior members as analyst/intern who works for them on a hourly basis. He even shared with me the salary that they are paying which is really an intern salary.
My question is: in your book and on your website, you repetively emphasize entering VC is hard, once you are in, you are in. I am really interested in and passionate about a career in VC, but is it worthy for me to enter VC as an analyst/intern, receiving hourly salary ( abandoning a consultant salary and not to mention no additional benefit with an hourly pay such as pension and health insurance etc)?
I wouldn’t create financial stress for yourself in order to break into the VC business.
A VC firm with >$50MM AUM should be able to pay you a salary that will at the very least pay your bills, and even smaller firms will offer basic benefits like health insurance. For example, the firm where I worked ($160MM AUM) had 3 junior professionals and 2 full time partners and we had a great health insurance plan.
Here’s an alternative for you: Have you thought about taking on part time or project based work with the firm? This way you’d gain experience, they’d get the benefit of your services, and you wouldn’t have give up your day job (and salary). One of my friends took this route with a US firm and ended up getting hired (at a livable salary) after a few months of hourly work.
If you want to go the part time / project route, be proactive and propose a project that would dovetail nicely with the firm’s interest areas and your experience. Even if they don’t like the project idea, it will help start a conversation that will hopefully end up with you doing some work for the firm.
Last, I’d leave compensation discussions until the end – when you know they’d like to bring you on board. Talking about compensation during informational interviews will get you sidetracked and take the firm’s focus off of what you can contribute.
You can politely deflect compensation questions in a couple of ways:
- State that you’d want to be paid similarly to your peer group at other funds of similar size OR
- State that you’d prefer to discuss compensation later in the interview process once you have a better sense of the job requirements and the particulars of the firm.
2) Secondly, he suggested I could go for a secondary captial firm (secondary buy-out / directs), as he described they are having a booming business right now in life science session. Are you familiar with this kind of VCs? and any difference in the job-hunting tactics with such VCs?
I think the networking tactics (some of which I have outlined in my VC Careers and job hunting eBook) would be quite similar. However, I’m not sure how secondaries firms source and analyze investment opportunities. I’m sure the day-to-day is quite different than what you might see at an early stage VC firm. You’d probably want to do some informational interviews with people with secondaries experience before making a decision if that line of work is for you or not.
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It is in the nature of storage engineering that every new product is essentially in extended beta. You’ll see one set of problems using 10 systems, another set with 100, and yet another with 1,000. Squash each set of bugs and eventually you get a solid product. There are no shortcuts.
I’ve no investing checkbook to speak of but that doesn’t mean I don’t have an idea of where I’d place some bets in the early stage tech ecosystem were a pot of money to magically appear! :) Feel free to borrow, elaborate upon, or debate any of these seed investment ideas.
1) Identity – Username/password authentication is woefully inadequate to protect us yet it is still the standard for authentication on the internet. I can’t see the current state of affairs lasting another 5 years given the growing sophistication of cyberattackers. Plenty of room to innovate in this space (probably leveraging some of the latest / greatest mobile tech) and therefore room for some young companies to make a name for themselves.
2) Marketing for recruiting – The recruiting tech space has been pretty staid for a while. Recruiting has typically operated as a sales-like function within companies but I think there is a big opportunity related to candidate marketing and/or helping recruiters build relationships with passive candidates. Think Eloqua or Marketo – for recruiters.
3) Integration software for Normals – Products like Zapier and Ifttt are just scratching the surface in allowing Normals to integrate their cloud-based services together. There is room for a big company, or a few big companies, to be created in this space.
4) Tablet Music – New paradigms of music creation and performance are available through the tactile interface of a tablet. We’re seeing traditional vendors like Korg (I love the iKaossilator!) take advantage of this and repackage their physical products into tablet apps. This not only opens up new avenues of music creation for experienced musicians but allows novices (guys like me, for instance) to fairly quickly make music that sounds good and is fun to make. Plus, by virtue of being on an internet connected device, it opens up a world of possibilities for collaboration and shared performances. Bottom line – this is a huge market where a startup could make a splash.
5) Data Estates – Throughout our lives we create a huge amount of digital content through photo sharing, social networking sites, and use of other internet services – our ‘data estate’. What happens to that data when we pass on? I want to ensure that when I pass on my data is provided to those I care about – namely my family and friends. Estate planning is a very well understood concept in the physical world and it’s only a matter of time before that concept is brought to the virtual world. It’s Day 1 in the Data Estates space, which is why I’d love to place a bet there.
How about you? Do any of these investment areas seem compelling to you? Or am I way off of the mark?
Let me know either way – I’d love to hear from you.
Gratitude is more powerful than we realize. In one experiment, Francesca Gino and I asked people to spend some time helping a student improve a job application cover letter. After they sent their feedback, the student replied with a message, “I just wanted to let you know that I received your feedback on my cover letter,” and asked for help with another one in the next three days. Only 32% of the people helped. When the student added just eight words—“Thank you so much! I am really grateful”—the rate of helping doubled to 66%. In another experiment, after people helped one student, a different student asked them for help. Being thanked by the first student boosted helping rates from 25% to 55%. The punch line: a little thanks goes a long way, not only for encouraging busy people to help you, but also for motivating them to help others like you.
I cant urge you enough to pay attention to the people around you, to watch for signs of the talent that dwells inside them. Look for opportunities to help foster their strengths. Very little in life will give you greater pleasure than nurturing the talent in others.
We are also very much focused on what is in the best interest of the entrepreneur. You might ask “how can taking $2mm for 20% be better than taking $5mm for 20%?” and youd be right asking that question. The answer is you can get the other $3mm later at an even higher price. That has been the history of many of our investments.