Generational Transition In VC Firms
Today, sometime around 5:30/6pm PT at the Upfront Summit, my partner Andy and I are going to talk about generational change in VC firms, in a talk moderated by Lindel Eakman, who has been our lead limited partner investor at USV since we started the firm in 2003.
The subject is timely with the news that the leadership of Sequoia, surely one of the greatest VC firms in the business, is transitioning a third time, from Jim Goetz to Roelof Botha and Alfred Lin.
I don’t want to steal our thunder for what is going to be a lively conversation with Lindel this afternoon, but I think this is a very important topic. When my partner Brad Burnham and I started USV in 2003, we told prospective investors, including Lindel, that we had no intention of building an institution. We said we just wanted to create a place we could do great work and when we were done, the firm would be done as well.
That was naive. Whether we like it or not, we did create an institution at USV and the key stakeholders in that institution are not the partners of USV, or the team at USV, or the limited partners at USV. The key stakeholders are the founders, leaders, and team members of the 80ish portfolio companies of USV. They have attached their companies to our brand and we owe it to them to sustain it and build it over time.
I didn’t understand that in 2003, but I do now. And so did Don Valentine in 1996 when he passed the baton to Mike and Doug. That is an act of courage and respect for what is special about a venture capital firm and I think it is something to emulate. Which we are doing at USV now and which Andy and I will talk more about later today.
It takes a self awareness to step back. I have seen founding CEO’s do it. It’s cool they passed the baton like that. Sometimes, it’s a power grab instead of a peaceful transition.
We said we just wanted to create a place we could do great work and when we were done, the firm would be done as well.Seems to indicate that at the time you didn’t think you would be hiring anyone or taking on any partners.  But even given that you might have thought that as a result of burnout at Flatiron you weren’t going to supersize, how is that even logistically possible? Given commitments that you have made and money that was undermanagement. What I really want to know though is what Lindel thought when you told him that. We’re done, everyone out of a job, sorry. Or is it just similar to what you have done with legacy Flatiron investments.
Is there a preview of a USV announcement weaved into this post?
Chelsea Clinton to be named as a new partner?
posted here and on usv.com last Junehttp://avc.com/2016/06/usv-…https://www.usv.com/blog/us…
a good excuse to share my favorite analogy:duncan,parker:leonard,aldridge :: wilson,burnham:weissman,wenger
but who is Pop? i love Pop. greatest NBA coach in my lifetime and one of the great human beings on the planet right now.
i feel like if you have an LP that has really helped shepherd the transition that would be a great fit for being USV’s coach pop. while i think coach pop probably consumes a lot of media that may paint a distorted picture of trump, i appreciate that pop, who generally only speaks to the media to troll them (in a way i find deeply hilarious), took the time to sincerely express his opinions to the press.
Brad is Pop.Pop:Duncan Brad:FredGinobili, Parker, Kawhi, Aldridge, all the 3 shooters are the company founders.
Is that EST?
PT. i will edit the post to reflect. thanks!!
Investors pass on their DNA to company institutions as much as customers, founding team and other parties involved do.It’s easy to forget how each contribution is passed over to successive generations of that company.Looking forward to USV’s talk.
Late but not least, 新年好 to you Twain.
Thanks, not late. Celebrations happen for a full month!谨祝新年快乐幸福, 大吉大利 — I hope you have a most happy and prosperous New Year. https://uploads.disquscdn.c…
Have an amazing chinese new year! Eat yummy dumplings for me!
Cheers, Shana! Is this enough dumplings for both of us and others on AVC?https://uploads.disquscdn.c…
Is there a word for really thin skinned dumplings? I can point them out in dim sum, but I like the skin to be see through, and I have a hard time expressing.
Crystal prawn dumplings are thin-skinned:https://uploads.disquscdn.c…Also, sharks fin dumpling (my favorite):https://uploads.disquscdn.c…Thin skin is pronounced “boc pay” in Cantonese and “Báopí” in Mandarin.
Thank you! Those look really awesome! I always say xie xie and now I realize that must not be right in both dialects but people seem to realize.
Xie xie is Mandarin. Doe jey is Cantonese.There’s a difference in dumpling skins. Pot stickers are made from all-purpose flour which is too dense to be see-through.Crystal dumplings are made from rice+tapioca flour which mixes clear with water.It also depends on the skill of the dim sum chef how thinly they can roll the skin without breaking it.
Thanks. Now I know in English too which is I like Crystal Dumplings!Never knew that word. I suppose people have just been nice to me over the years as I stumbled through their language! That is my life, I feel if I try to do a little people appreciate, except in France where my sister in law is from 🙂 She stays with us every year for more than a week, every summer with my god-kids we love her but she can be tough 🙂
You underestimate my dumpling eating ability. I take half
Just reading the Sequoia “Sand Hill shakeup”:https://www.axios.com/pro-r…
Don Valentine was the real deal.
had you gone out with the intention of building an institution and a knockout VC firm, you may not have succeeded in either.
Is there a live stream or will this be recorded?
i have just learned that this event will not be livestreamed but it will be video recorded and published online next week. i will blog it then.
You’re not going to do suspenseful reveal like the SCOTUS nomination?
One aspect Andy Rachleff has cited among firms which persist is they have an institutional memory where lessons, missteps, and insights are passed down to new leaders. For USV, it would seem like what’s passed down is ability to spot network effects.
and a lot more
Yes, Knicks seats
Remember my best quote is: “My biggest legacy is the network of people I’ve hired and what they’ve gone on to do.”As you get older you think about what that means. It certainly means that for your kids.But when you think about it you spend more than twice as much time with co-workers overall. I mean by that, you spend half your waking hours with your kids for 15 years (first three is just care and feeding) then they go to school and it still is SUPER important but the time winds down as they live their own lives, and your other half with co-workers.Figure most careers are 30 years after you hit your stride. (I hope mine will be much longer)That is the real blessing of having a career not just a job.You have a real influence on people and their careers. It is huge responsibility.If you just have a job that is great, and we just had a ceremony for my wife’s late Uncle. His legacy was that even though he was a rough man, with just a job, he was the only family member that showed my wife love, kindness, empathy, and support her entire life. She knows she would never be the person she was without him. He did not give from his surplus he gave from his bowl. She insisted he walked her down the aisle.And that is great. But for those of us that have great responsibility for people we also have a great burden.I know you have met that, and I am sure it will continue
It’s how the USA is run now-a-days. Haven’t you noticed?
perhaps there needs to be a new Amendment.
We don’t amend the constitution here. We issue Executive Orders.https://twitter.com/TrumpDr…
I have been using all my still available brain power, om, ki, etc.. to erase this man from my head, because I am really fed up at this point, but this is really funny. Thanks for the laughs Jim.Interesting effect, would love to see the making-of.
I get that it is not popular here, but this is a pretty interesting read:http://blog.dilbert.com/pos…
Over here we don’t have a written constitution. The powers that be make it up as they go along…to serve *their* interests.
I think there should be a policy where there are no politics except for a political post. Because they quickly degenerate.If its a political post then one of two things: turn off comments or realize it’s no hold barred with the exception of true hate speech, I mean true hate speech. There is no “gaslighting” no getting offended at viewpoints that are way out of touch with yours, no problem with sarcasm, and most importantly the next day all is forgotten.I used to never comment on political posts, but reading some of the comments I just could not imagine how out of touch some people are with just common people and how much they think because they are the tech elite (and we are) our view is the only view.I am going back to not posting (or looking on political comments), but I think I’m gone if I keep wading through political comments on every post. Maybe for some that’s good riddance, and tell me if you think it is, I have a very thick skin.Audre Lord: “It is not our differences that divide us. It is our inability to recognize, accept, and celebrate those differences.”
OK, see you in the comments tomorrow.
AVC has been a great place to engage with people who think and feel differently about things. I’ve learned a lot here! And I’ve made some real friends, too, people I know in real life. (Thanks Fred.)When things veered into politics, same. Because of that, I didn’t feel blindsided by the results of the election.On the other hand, online is no place for nuanced conversation about anything that people have widely different beliefs about.We may as well use semaphore to talk about what we believe. It’s not effective.Beyond that, more personally, I was recently trolled for days on Twitter, after I was asked to “explain” a belief, in a conversation with @andyswan and @pointsnfigures:disqus. And in haste I went against my better judgment, and “explained.” Cue the trolls and eggs, yelling in my mentions; nothing scary, just a nuisance. in the more distant past, I’ve been trolled for stuff I’ve said here, too. (Being a woman on the internet is a bit like traveling while female, lol as we’ve discussed here.)So the other day, after making the mistake of saying something about “freedom of speech” (someone’s wrong on the internet!) and Jeff asked me what I thought about something very specific?Uh uh. I wasn’t going to get it right anyways. Over a coffee, or glass of wine in an actual bar, ok. Online in this “bar” or on Twitter, nope.I hope you won’t leave completely, Phil! And yeah, I get it.https://xkcd.com/386/
As we said in our conversation, my expectations are very different in the downtown Chicago Westin on a Tuesday, than they are in the college bar on a Friday night.I would like to just keep them separate.And that is the reason I don’t really do Twitter.
This graphic’s especially funny because USV’s logo is square whilst the generational thing means “going full virtuous circle.”LOL!
fred’s son is kinda young. Plus, what if he wants to do something else.Same goes for Brad – I thought his kids were also younger-ish
the unmanned (inter)state vehicle – it’s the future.
I think it’s part of being founder focussed. We profit so much from you as individuals but also from what USV stands for as a brand. It’s so nice to hear that you see it that way now. And I still hope for swag 🙂
don’t hold your breath
Alfred Lin is a kindred spirit to Fred. That made me smile
I imagine he’s grown a ton given his experiences. But, here’s my Alfred story.In 1999, while @ Venture Frogs w Tony, we got sent to meet Alfred because ‘VF are a perfect fit for you.’ We got sent there by a Sequoia associate.The company was a direct competitor to TellMe, where Alfred went to work and where they had deep, deep personal relationships ( family members working there I think, ex-MS colleagues, VF might have even invested in tellMe).The Sequoia associate hosed us to curry favour w Alfred & Tony, a classic insider VC caveat emptor move..I will leave it to Fred to decide if they are kindred spirits. I doubt it.
Mmmmm. I loved his views as CFO of Zappos. No call timers. Quitting bonus. But not telling insider moves is really poor form. You should check but really poor form
One of the founders announced it to me in the elevator going up to the VF office. The 3 founders met w VF over my strong objections, if you can believe it. They’ve grown a bunch too.
If they knew before they spoke…..well then shame on you (not you personally but the saying applies)The two biggest beef’s I see with Entrepreneurs and VC’s I see it the “they stole my idea” “they stole my company”Now at least half the time the Entrepreneur is wrong. You presented and not looked at the portfolio, they liked your theme but somebody better than you convinced them and you lost, you blew through all of the money.Too bad.Now on certain occasions there are really bad behaviors.In my talks with Alfred, while he could run rings around me on numbers (and I think I am pretty good) he shared the values that it wasn’t just about numbers. we had a great talk that if you are a car company you need to be about cars.That is what I loved about Fred’s post yesterday. That founder felt the passion of drones. So awesome.I’ve had people say to me….I just want to tell you my idea FNAC (Feature not a company). Can you sign an NDA? No. Ok let me tell you. Half the time it was already on our roadmap. Too bad.
Our experience was very dew eyed girl from the Midwest goes to Hollywood. We weren’t in the club so using us as a tech evaluation didn’t tweak any ethical concerns…….as we were not people they ever thought they would see again. As I said, caveat emptor.Alfred, like so many people – including the President- who define winning almost solely by the numbers, sees success as a great eraser. Very enterpreneurial.
I only wish I had the talent and demographic to apply someday to carry on the institution. The person that does will have big shoes to fill.
Shouldn’t it be called Up Top Summit?
Its Been a good place ot engage and have dialogue. thanksPaul Azous, CEOProspectus.com