Entrepreneurs are from Mars, VCs are from Venus
There was a popular book in the early 90s about the communication gaps between men and women. I bastardized the name of that book for this post. Although I never read the book, I believe it basically says that the way men and women think about things and talk about them are fundamentally different and unless you understand that, you are likely to have issues in a relationship.
I’ve often compared the relationship between an entreprenuer and VC to a marriage. It’s clearly not as permanent (hopefully) and it only goes so far as an analogy, but it works to explain a lot of issues.
And there is certainly a communication gap. VCs and their cliches (a topic I blog on weekly) can really annoy entrepreneurs.
I did that yesterday with my post on the Quick Flip. Steve Kane, founder of Gamesville and Gamelogic, and one of the best entrepreneurs I know, took issue with some of the comments I made about Gamesville in the post. And rightly so. Not because I misrepresented the situation (although he thought so), but because of the language I used.
I said that "Jerry did 3 or 4 quick flips in 1999". One of them was Gamesville. What I was saying was the Jerry did 3 or 4 investments that resulted in quick flips in 1999. That’s true. Steve interpreted that as saying that Jerry was responsible for the sale of Gamesville to Lycos in 1999. That is certainly not true. Steve and his partner Stu were the ones who really made that deal happen. A classic example of mars and venus at work.
But it doesn’t stop there. I said that Gamesville was a "quick flip". From our perspective it was. We were in and out (holding public Lycos stock) in less than a year and made something like 5 1/2 times our investment in that time. It was a great "quick flip" from an investors perspective.
But Steve and Stu had spent years building Gamesville and only took venture money late in the development of their company. It was not a "quick flip" from their perspective and it was not a company that had to be flipped in order to make money.
Steve is totally right to call me on this stuff. It’s talk and cliches like this that give the VC business a bad name with many entrepreneurs. We take credit for the investments we make and they interpret that as taking credit for the companies they build. And that’s wrong.
So I apologize to Steve for doing that in my post yesterday.
And I am glad to lay all this out because I think its an important issue in the business. Entrepreneurs build companies and VCs finance them. When VCs start taking credit for the outcome, its going to create issues.