Paul Graham says VCs Not Bold Enough. I Say None of Us Are

I read Paul Graham’s article last night and I went to sleep with the intent of disagreeing with it in my post this morning. There are two points in the article, but the one I was most interested in was the part where he talks about VCs being bureaucrats that are not willing to make bold bets on new seemingly risky ideas.

But when I woke up this morning to write my piece, after re-reading Paul's essay I could not disagree. I think what I really want to do is explain the phenomenon.

The core issue with VCs is, they are us.

We are all, by and large, scared, conservative creatures who are not willing to step outside of our comfort zones. Even those of us that are not scared are lazy or conservative in other ways. I have written software since I was 13, and yet during the era of the VCR, I never took the time to learn how to make any of my VCRs stop blinking 12:00. Sometimes exploring new things can be a pain.

It is true that entrepreneurs are less likely to be conservative since entrepreneurship is inherently risky. But VCs are, by and large, not entrepreneurs, and so the fear of failure can be paralyzing.

For most people in our culture, the fear, and sometimes the actuality, of failure, are absolutely unbearable. In most of our culture, failure is punished mercilessly. Indeed if you fail as a VC firm you risk not being able to raise a new fund. If you fail at being a VC personally, you will almost certainly loose your cushy VC job.

Amusingly, most VCs are failing anyway.

It seems to me there is no good answer to this. It is in large part about human nature. VC behavior reflects a prevailing attitude in society. Risk is inherently risky.

What is interesting to me though is a much bigger picture issue. I do believe that one of the most critical elements in life is attaining the ability to be unafraid to fail. Fear of failure will prevent you from doing some of the most enjoyable and/or fulfilling things in life.

And so I agree with Paul’s thesis. VCs should be bolder. I just don’t think that message should be limited to VCs. Most of us drive through life with all the windows closed. That’s great in the winter. But there is nothing like a morning ride through the scent of spring. I suggest we should all try a bit more of life with the windows down.