“Admit it, you VCs are really just glorified recruiters”, declared one of my recruiter friends the other day in a pejorative, self-deprecating way. It made me pause, because the barb rang true. After all, seven of my seven portfolio companies are in the middle of recruiting senior executives to add to their teams – and I, along with the other VC co-investors, am knee deep in trying to help out: participating in weekly recruiting calls, screening candidates, pumping our networks for leads, etc. After a few years of observing this business, I’ve learned that this is a common phenomenon throughout our portfolio and others.
So how did I suddenly become a glorified recruiter along with my other, more glamorous brethren? I guess it’s the old yarn – business success is 10% inspiration and 90% perspiration. There are a lot of people with good ideas out there trying to start businesses, but very few execute them successfully. Those that can are typically led by an outstanding team that many investors would back in almost any situation. A good team doesn’t make a company 10% better; it makes it 1,000% better (at roughly the same cost!).
In fact, the “VC as recruiter” phenomenon is arguably the fundamental value-add a VC provides to a start-up. Would Netscape have been nearly as valuable and successful a company without Jim Barksdale? Where would Google be without Eric Schmidt? If I had been the VC that gave Larry Page and Sergei Brin money rather than John Doerr, would I have been able to convince Eric Schmidt to join these two Stanford PhDs and take the CEO gig at Google – never mind known that he would be the perfect fit there? Don’t bet on it.
So I guess we VCs should really embrace our roles as “glorified recruiters”. Rather than shirk from the task, I think we can learn a lot from recruiters about how to assemble teams, putting the right mix of ingredients together, interviewing more effectively.
And while I’m on the topic, there’s another main value-add VCs try to bring to the table that should be demystified. You’ll hear many emphasize the power of their "rolodex" and their skills as super "business development" executives. When I first heard the term, "business development", many years ago and asked my manager what it meant, he smirked and observed, "That’s just a fancy term for sales". I guess that makes VCs glorified salespeople as well!