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Summary:

Chris Dixon is outspoken. He says difficult things. And he pulls no punches in our interview, in which he talks about the rise of super angels and micro VCs, his transition to investor from entrepreneur and how most VCs don’t know what they’re doing.

Chris Dixon is outspoken. He says difficult things. On his blog, Dixon writes about the technology industry’s taboos. “My blog is written from the perspective of the entrepreneur,” he says. “It was started as a VC countermeasure.” And when he’s really angry, his inner comic tweets gems such as: “Twitter is like a drunk guy with an uzi killing partners left and right. Expect investment in ecosystem to drop significantly.” So you might be thinking, just another blogging blowhard. No sir — Dixon is co-founder of a company called Hunch. He sold his previous startup, SiteAdvisor, to McAfee.

And these days in his spare time, he invests in startups through a New York-based founders-backed fund called Founder Collective. In fact, he’s on the speed dial of many Silicon Valley investors. And yet he marches to a different drum — one heard only by entrepreneurs and startup founders.

I first met Dixon back in 2005, when I was working for Business 2.0. An MIT graduate with big ideas, big ambitions and more importantly, a refusal to never take the status quo for an answer, he made an impression on me, and we’ve since stayed in touch. He’s come a long way, but the moment I sat down with him for this interview, it was clear to me that he hadn’t changed. Sure he had new, hipster glasses. A bit more swagger. But he’s still the same plain-speaking guy I met five years ago.

And he pulls no punches in our interview, especially when talking about the rise of super angels and micro VCs, a new trend that’s shaking the venture capital industry to its very core.

Part 1:

He also talks about his transition to investor from entrepreneur. “I got involved in investing mostly to get into the flow of what was happening on the Internet,” he says. “It was the exact opposite of the reason as to why others may invest.” In the process, he said he discovered that some VCs were pushing large amounts of money to startups at a higher valuation than was necessary. “When a buyer is asking for higher price, you know there’s something wrong.”

And it’s why he believes the current seed-stage investment movement started. At Founder Collective, the fund has a negligible management fee. “We make money when our investors make money…What’s so radical about that?” he says, adding: “What scares most VCs is that they don’t know what they’re doing.”

Part 2:

He also talks about lean startups, why entrepreneurs shouldn’t start a business with the goal of flipping it and why fewer people swing for the fences these days. As to his investment philosophy, it all comes down to one thing: the people. He looks for ideas that are unique and ones that others don’t quite understand. “If a Wall Street person is trying to start a company, it’s almost always a disaster and I wouldn’t invest in that,” he says.

I suggest you watch both videos. Before you do, here’s another little gem from Dixon:

“There are two kinds of investors: Ron Conways who try to create value by finding good people and helping them create something great, and others, who want a piece of someone else’s things. The builders and the extractors. Avoid the extractors.”

  1. His comment about Twitter was incorrect and aimless. Twitter is not randomly killing anyone they are trying to build their business. it just happens to be the case that Chris doesn’t like it. Well, tough sh**!

  2. MyLocator ® Friday, May 28, 2010

    Preaching the “startup gospel”.
    Thank you for helping level the playing field.

  3. It’s hard to believe that one person can issue so many absolute truths. For example, run when Wall Street types start a company. But then look at Nate & Natty, as described so well by Brad Feld:

    http://www.feld.com/wp/archives/2010/04/learning-to-program.html

    I don’t think any one person “gets the rules” for the rest of us to follow, even if they’ve been successful. Perhaps they learn a thing or two; but then they may fall again.

  4. i love that last quote Om

    that’s the truth

    1. This is so true, and they always demand far more relative to their effort or contribution, every time.

  5. Its a good balance to have other opinions about the venture capital/entrepreneur universe. I appreciate hearing Chris’s perspectives & revelations. It may also break the bubble of other’s idealistic preconception of it all??? Nice….

  6. Shripriya Mahesh Saturday, May 29, 2010

    The interesting thing about the last quote is that every single VC will say they are like Ron Conway. I mean, ask VCs to put themselves in either bucket – do you think any will self-select into the latter? The problem is that most “extractors” are not very self-reflective.

    It’s going to be really funny – I predict that in the next six months VCs start saying stuff like “I am a builder, not an extractor”. Lol.

  7. I respect the balls on this guy when he takes a shot at Benchmark (which I’m sure everyone agrees with but no one has the balls to come out and say in public like this). Good interview.

  8. Really brillant!

  9. Sanjay Maharaj Sunday, May 30, 2010

    Watched the vidoe, loved the interview and admire Chris for hitting it stariaght from the gut. He makes a lot of sense and I fully agree with him when he says entrepreneurs shouldn’t start a business with the goal of flipping it.Business should always start on a notion of creating a long lasting profitable value and transforming things which rewards all those who are involved and not just a few. It should be a luanching pad to make all those who rolled up their sleeves to work on the idea a sucesss becuase that is where true satisfaction comes to see commom people around you flourish as well.

  10. James Watters Monday, May 31, 2010

    There is an interesting tension between the comments about flipping and the comments about the inefficiency that public markets have in doing big new things….

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