The Perfect VC: Operator or Investor? asks Bill Burnham, a general partner at Softbank. I have known Bill for a long time, and this is something he has often wondered about along. In our conversations, he often wistfully questioned the conventional wisdom: “Conventional wisdom has long held that the best background for a successful Venture Capitalist is that of a hardened industry operator. The reasoning behind this wisdom is that a VC with operating experience should be much better equipped to help portfolio investments deal with the day-to-day challenges of running a start-up and can therefore better help manage an investment to a successful outcome.”
Now compare this with the “investor.” I am going to go with the investor. Look at all the smart operators – they acted with equal amount of insanity during the bubble, and when the bust hit, they shut down with equal insanity. Investor VC, well he is cold, analytical and ruthless in all situations. And definitely more in tune with his job: returning huge profits for his limited. Despite the feel good “we love to help the entrepreneur” doublespeak, no VC should ever forget for a minute forget who his real master is: the limited partner who trusts him with hundreds of millions of dollars and pays for his fancy cars and expensive golf weekends in Monterey. And another reason why a Investor VC makes a better VC: Mike Moritz. He ran no stinking company and yet created returns matched by perhaps half-a-dozen people in the valley. Just see his track record here!