Some things I learned about venture capital in 2010...
Wednesday Jan 5, 2011 by Bilal Zuberi - Principal, General Catalyst Partners
For the past couple of years I wrote end of year notes as predictions in the cleantech space for the next year. (cleantech predictions for 2010).
But this year I have already read too many cleantech predictions for 2011. Some make sense, some are self-serving, some seem out there, and some just too generic to worth spending more time on. So I won’t add anything to them. Instead I will share just a few things I learned as a relatively new venture capitalist in 2010.
- This was certainly the IT year in the VC world. IT investments rebounded big time as we saw unbelievable rise of companies like Twitter, GroupOn, Quora, Square, Zynga etc. Can you believe it that the reason I did not add Facebook to the list is because it seems too mature among others? Facebook, a company that started just a few years ago, is now listed alongside juggernauts like Apple, Google, Microsoft.
- I learned from a successful VC that there are at least two kinds of plays in the consumer/IT world: (1) aiming for ubiquity without necessarily having a business model (Twitter, Quora) and (2) defined business models in well defined markets. VCs in 2010 would pay whacky valuations for the first because they had no idea if the company would be worth $50m or $5B. The second category demanded more reasonable valuations, even if slightly inflated given the times.
- Learning venture capital certainly follows an apprenticeship model. When I started in 2008, I thought I knew a lot. 2009 made me realize how little I knew and 2010 allowed me to focus on a few things that I wanted to learn better. Same for 2011. Its gradual learning and a humbling experience.
- Venture capital is about helping great entrepreneurs build great companies. Building companies is hard work and one really has to put a lot of effort into it. This year I played at least the following roles for some of our portfolio companies (and truly enjoyed doing so): recruited executive teams, engineering teams, Board/Advisory Board members; compensation plans; IP strategy; market analyses & business development; competitive landscapes; customer interactions; marketing and PR plans; personal mentoring/coaching; travel reservations and occasionally bringing donuts etc. Thank you guys for allowing me to add some value as an investor.
- Finding the best entrepreneurs to back is the lifeblood of this industry and I learned that the only way for a VC to do so is by being genuine in offers of help/advice/feedback, respecting entrepreneurs and their ideas, and by keeping the entrepreneurial DNA alive in own self. Its easy to say so, but hard to do. I am working on it.
2010 was a fun year. I learned a lot. I have to thank my colleagues at General Catalyst for giving me the opportunity to do so. I leaned on their experience and advice so much this year. And I have to thank all the great entrepreneurs, executives, professors, policy wonks and other VCs that I interacted with this year. You are awesome, and meeting you is the best part of my job! I look forward to meeting more of you in the new year. Happy 2011!
Bilal Zuberi is a Principal with General Catalyst Partners in Cambridge, MA. You can find additional content on his blog called BZNotes! You can also follow him on Twitter - @bznotes.
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