The strengths and weaknesses of VCs

Edited excerpt from “Did you learn anything useful in VC?” by Sarah Tavel:

The most common question I get is “Did you learn anything actually useful in VC?”

Yes.

1. You learn how to ask the right questions. VCs spend a huge amount of their time asking questions, and thus learn the craft of asking the right questions.

2. You learn how to read people. As a VC, you’re constantly meeting founders and building your pattern recognition for reading people.

3. You learn how to learn. In VC, you’re constantly ramping up in a new area. Each company you evaluate brings with it its own ecosystem that you need to understand. Similarly, trends in the tech ecosystem turnover quickly.

There’s a flipside to these three though:

1. In startups, you’ve got to answer the questions. As a VC, my muscle for asking questions was a lot stronger than my muscle for answering them.

2. You don’t learn how to read an organization. VC firms tend to be smaller partnerships. People who have come from larger companies definitely have a leg up in this regard.

3. You’re not specialized. VCs rarely specialize. Sure – I knew the e-commerce ecosystem cold, but that doesn’t compare to spending several years working at Google.

Notes:
(1) Sarah’s post is about what she learned as a VC. But entrepreneurs can read it as a description of the strengths and weaknesses of VCs.
(2) Cf. Investors, VCs and product advice.

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