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Former Marine, entrepreneur and Columbia MBA
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Great post, Dave. I've been following the related debates on AL, and this definitely was the most entertaining and, I think, one of the most informative/correct. I think I split the difference b/w you and Fred on a couple of points and don't think either one of you are necessarily right. Fred's quote,"and btw, you can't [support and provide sound advice to start-ups] well when you have 500 portfolio companies" is, to me, a false choice. Star Wars taught me that only Siths deal in absolutes, and since I'm not a Sith, I, therefore, reject that logic. Fred's point has merit inasmuch as most start-ups (not to mention, people) benefit mightily from focused mentorship from their investors and advisors, and if your investment portfolio is super-sized, then you run the risk of being half-assed in your dealings with your portfolio companies and actually reducing their odds of success. The counterpoint to that logic, however, is that 1) you and your team are getting many more repetitions with your numerous investments and are learning lessons through witnessing all of their best-practices/points of failure. This allows you to get smarter faster and pass your accrued wisdom on to your portfolio. 2) your portfolio is now a community both by design and by virtue of size, and that community should benefit from their built-in network and share their experiences with each other to collectively get better. If this is not happening (i.e. if you are not accumulating and passing on wisdom and your portfolio is not self-teaching, then Fred's point carries more weight. If you are doing those things, then each of your portfolio companies should increase their odds of success. That's one hypothesis, anyway. The other item that caught my attention in your post was that future investors will need specific domain experience to be relevant. I see your point, but I am somewhat skeptical. I am skeptical because I don't think that being a good programmer, for example, will make you a good investor any more than it will make you a good CEO. MBAs and bankers will continue to be relevant--although, perhaps not as dominant in the investment space--because they (ideally) combine excellent technical business skills with a broader-based business acumen that leverages the expertise of the domain gurus you refer to without getting stuck in the weeds. ...Although, I admit, as a former MBA, I may be biased. :-) I will say that my MBA is proving to be very useful in my role with SpeakerText in terms of implementing process and minimizing fire-drills. Anyway, thanks again for the very engaging post.
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Feb 27, 2011