How to Get a Job in Venture Capital

Over the past 1.5 years, I’ve gotten a lot of requests from people looking to break into venture capital. In all of these 30 minute coffee chats or phone calls, I find myself giving the same recommendations and tips over and over again.

To scale my time this year, I’m going to jot down the top three pieces of advice I give to those looking to land their first job in the venture capital industry.

 

1. Brace yourself for the fact that you will be operating differently.

When you “operate” in venture, you are moving at a very different pace.

Note that you aren’t going to stop operating or building – at it’s core, a venture firm is still a company that needs to continually be building, iterating, and adapting to survive and win.

The key difference is that venture firms raise their capital from limited partners and thus aren’t exposed to the market forces in the same way that a startup is.

If a startup cannot build a product or service that satisfies a need in the market, no one will pay them, and they will run out of cash and die. In a startup, there is a real sense of urgency to move each and every single day.

VCs make money from management fees (usually 1-3% of the total funds raised that is allocated towards a firm’s operating expenses i.e. salaries) and carry (usually 20-30% of profits made from successful investment payouts). Since the cash flow from both of these sources has been budgeted into each fund, VCs naturally don’t have the same sense of urgency.

Obviously, a VC can’t hang out for years doing nothing with their LP capital and collecting management fees or else there would be consequences, including serious reputational risk and the inability to raise another fund.

Additionally, the VCs who rest on their laurels, don’t think of themselves as a startup, and expect the best teams to come to them for an investment, will slowly die out.

However, for all reasons listed above, VCs can afford to be patient and wait to make the right investments.

Bringing this back to the initial point, VCs operate in relative silos for most of the working week. You’re often spending most of your time in 1-on-1 meetings & calls with founders getting to know them and their businesses.

One or two times a week, you may have partner meetings where you collectively get together and discuss the most promising companies that you want to dig further into.

For time-sensitive investments, the team will rally together to do dilligence and “win” an investment. Post-investment, the full team will do everything in their power to support the company but usually there is one point of contact for the company who may or may not join the board.

The reason I bring up this point first is that I want people to know that this job is very different than a traditional operating role.

You won’t be surrounded by a team every day and there won’t be any war rooms where you gather to prepare for product launches.

The feedback loop is very long and you often won’t know how you are doing until years later when your companies are performing very well or very badly / cease to exist.

 

2. Stop networking with VCs. Get to know founders and provide value to them in any way you can.

This is the BIGGEST mistake I see people making when they are trying to find a job in venture.

It’s natural to think that you should spend all of your time meeting with every single VC in hopes that one of them will magically think about you when a position opens up in their firm.

Just like with any other job in any other industry, people want to know that you can do the job effectively.

Specific to venture, you need to be able to prove that you are well connected and have a network of founders who will come to you when they are looking to raise money.

More importantly, VCs want to know if the founders in your network respect you for the value you bring to the table to the degree that they would let you invest in their company.

When I first interviewed for my last venture firm, FundersClub, the investment team there did a reference check with a founder in my network who I had previously done some work for (on nights and weekends). Because I had worked hard for this founder, he spoke very highly of me which helped to build a positive first impression with the team.

If you are speaking with VCs, it should be because you are already meeting with founders, doing the diligence, and are sending promising founders to these VCs.

If you send a founder to a VC who ends up doing an investment in that founder, I guarantee you will be top of the list when that VC is looking to hire.

If you don’t think you’ve built up this network or rapport with founders, see my next point below.

 

3. Build a unique and proprietary source of deal flow.

Regardless of what position you are in a venture firm, from Associate to Partner, you will always be sourcing. Sourcing never stops, so accept that now.

When you are recruiting for a venture firm, the firm has to believe that you are going to bring:

  1. Unique perspective that will help with developing investment theses & investment decisions
  2. Value-add capabilities i.e. significant operating or founding experience that builds credibility with founders and supports founders in the company-building process
  3. Unique deal flow to bring in founders and companies that the investment team doesn’t already see

Given that experienced founders and operators don’t really need to recruit for venture firms (they usually get courted by VCs), I’m going to assume that the audience reading this post has less to offer on the table for points #1 and #2 and will need to rely more heavily on #3.

Figure out what networks you have access to that the firm’s current investment team isn’t able to tap into (either out of lack of effort or affinity) and get to intimately know those networks. These could be anything from college campuses, founder support networks, online communities, to a blockchain meetup that you organize.

As a small example, I never built the Product Manager HQ community with the intent of finding founders but it naturally became a great source to tap into when I went through venture recruiting.

During the interview process at my last firm, one of my tasks after my first round interview was to find two seed-stage companies that I’d be interested in investing in personally and get in touch with their founders. I was given two weeks to complete the task.

I went home, pinged my PM community, and asked if anyone worked at a seed stage startup.

Since I had founded, provided value, and built trust with this community for a long time, the PMs trusted me enough to tell me more about their companies, what they were building, and even offered to make introductions to their CEO / co-founders for me.

It took me about an hour to finish the task and send back a detailed e-mail with two startups that I selected along with my investment rationale and proof that I could get in touch with their CEOs at anytime.

The investment team scheduled a follow-up interview round with me that same day.

If you don’t believe any of your current networks to be that unique or proprietary, then put in the work and create one. If you aren’t already acting like you are a VC who is constantly thinking about building unique networks, then you won’t succeed on the job anyways.

Good luck!

Learning Days

Most of my workweek tends to quickly fill up with sporadic founder meetings, company diligence, and portfolio company support. Rarely can I find the luxury of uninterrupted work blocks to sit for hours on end and properly study anything I want to learn.

In light of this year’s theme around deep work, I’ve been experimenting with the concept of “Learning Days” where I pick any topic I’m interested in and spend a full day (Saturdays or Sundays) deep-diving into that topic.

My first two learning days (Artificial Intelligence/Machine Learning & Blockchain) were relatively unstructured as I’m still figuring out the best approach to these going forward.

So far, I’ve kicked off each learning day in the following manner:

  1. Wake up and head to the gym for a run (a healthy body is a healthy mind)
  2. Shower and make tea
  3. Create a new Google Doc and throw it up on my second external monitor to document the day’s notes / learnings
  4. Look for a Medium article where someone has already aggregated the best links / resources for learning the topic of choice. For example, my buddy Sam DeBrule compiled a massive list of curated AI / ML links which drastically helped to cut down the time I needed to spend digging around the web.(obviously you’ll want to do your own research but these types of aggregated resources provide a launching point for mapping out what you know / don’t know)
  5. Go through each article I find: read and reflect. Each article should provide foundational knowledge for the next but I try to question / probe everything I’m reading. I want to develop a sense of which authors know what they’re talking about vs. those that are regurgitating information / filling my head with incorrect information.
  6. In my first hour, I try to first understand the history behind the topic (i.e. when and why did AI / ML first come into existence, what worked and what failed, what catalysts are leading to breakthroughs now)
  7. Now that I have better context around how we got to this point, I’m better able to understand the current state of AI / ML as well as map out a hierarchy of subtopics (i.e. AI -> Machine Learning -> Deep Learning -> Neural Networks) that I’ll need to prioritize my learning around for the next few hours
  8. For each subtopic, I try to understand: what it is (literally, what is deep learning), how it works (deep learning uses neural networks? ok, how do neural networks work?), and how it’s used in practical business / life (Google Photos uses deep learning for face recognition? much wow). I was never a great academic and this last part helps me tie concepts I’m learning to the “real world” so I don’t forget them.
  9. I’m also careful to include my source links next to all of my Google Doc notes so I can easily reference them at a later time.
  10. At the end of the day, I’ll revisit all of the raw notes I’ve taken and take some time to organize / structure them in a readable format – the hope is that someone completely foreign to the topic could pick up my notes and easily understand what I’ve learned that day
  11. As an additional forcing function, I’ve tried to “Feynman Technique” the whole process by teaching my significant other everything I’ve learned. Teaching the subject matter helps me quickly figure out which concepts or subtopics I need to spend more time on. It also helps that she likes to play the “why why why” question game which really forces me to simplify each complex concept. After teaching the topic, I have a list of follow-up questions for myself that I need to dig into since I couldn’t easily explain them.

I’ve got a long ways to go with these Learning Days but I’m loving them and they’ve spurred a new love of learning that makes me even more excited to wake up every morning.

 

Define Your Strike Zone

In one of my early middle school English classes, I had a seat next to the teacher’s desk where he had taped a poster of hockey athlete Wayne Gretzky and the quote “You miss 100% of the shots you never take.”

If I managed to submit a quiz early, I would lay my head down sideways on my desk and stare at that poster’s quote while waiting for the recess bell to chime.

At such a young age, my brain was especially malleable and I grew to embody that quote into everything that I did. There was no such thing as a fearful moment or a lost opportunity. Everything was a shot that I needed to take and there were no regrets.

Volunteer to present our projects in front of class? My hand was up first. Everyone scared to take the first leap while cliff-diving in Hawaii? My feet took control and I’d be the first over the cliff into the water.

That quote built an insatiable and intrinsic desire to always be pushing forward. Unfortunately, this desire also meant that I often had too many toes dipped in too many projects.

As a result, a finite amount of time and focus meant that I often lacked the ability to follow-through with each new opportunity.

In hindsight, it’s easy to see how I misinterpreted that Wayne Gretzky quote. Wayne didn’t line up a thousand crappy shots and take them all because he could. He had years of practice and instinct that allowed him to optimally line up his hockey stick, rack up the courage, and take the right shots.

When it comes to investments, Warren Buffett often speaks of a taking a “Ted Williams kind of discipline.”

Ted Williams was a baseball player on the Boston Red Sox who analyzed and carved the baseball strike zone into 77 individual cells. He then created probabilistic results of successful bats for each cell based on his history of hitting in each of these strike zones.

By using his rigid method and waiting for the perfect pitches in his optimal strike zones, Ted Williams maintained a .344 batting average and was responsible for more than a fifth of his team’s runs over two decades. For context, a season batting average higher than .300 is considered to be excellent and an average higher than .400 is a nearly unachievable goal. Ted Williams even managed to hit .406 in 1941 (source).

Now that I’m a bit more self-aware of my flaws, I take more time to focus and think before proceeding to jump headfirst into each new opportunity.

Venture capital has been the perfect industry to maintain this level of discipline. While each new founder I meet is unequivocally infectious, passionate, and convincing (as they rightfully should be), I only have a limited number of shots. Now, more than ever, I need to be defining my strike zone.

The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, ‘Swing, you bum!,’ ignore them. Defining what your game is — where you’re going to have an edge — is enormously important.

-Warren Buffett

Venture Capital and Product Management

Ever since entering the venture capital industry 8 months ago, I’ve been thinking about how best to cross-pollinate venture work with my previous product experience (Even going as far as to guest-speak on the #1 most listened product podcast about how Venture Capital is Product Management).

In my first post, I discussed how I first attempted to codify the qualities of a good VC. This step was important so that I could begin mapping PM skills / workflows to VC skills / workflows and look for overlapping opportunities.

At a sky-high level (reiterating: sky-high level), you can imagine product management to break down into 3 core buckets of:

Product Planning

All the user research / needs gathering / synthesis of qualitative & quantitative data that helps inform what product / features should be built.

Execution

All of the roadmap planning / sprint planning / spec writing / launch planning / cross-functional collaboration that gets the product launched.

Post-launch Iteration

The ongoing planning & execution necessary to keep successfully improving and growing the product post-launch.

If I map this to venture capital, I imagine it to look something like:

Product Planning = Sourcing

Creating deal flow through outbound sourcing (researching industries and doing cold outreach, attending events / demo days, hosting office hours at accelerators, etc…) or inbound sourcing (referrals, inbound e-mails, people pitching you at a party, etc…).

Execution = Diligence / Executing the investment

Filtering through sourced companies by undergoing deeper diligence (getting to know the founding team, deconstructing the product, digging into metrics, looking through historical financials if there are any, competitive analysis, determining customer love, etc…), negotiating terms, proving value-add to win competitive rounds, executing the investment.

Post-launch Iteration = Supporting your founders

Working with the founders to support them and help them succeed in any way possible (board meetings, strategic advice, helping them hire, finding them customers, guiding them on product strategy, thinking through growth strategies, etc…)

Tactically, here are a few random examples (these examples aren’t too structured so bear with me) of cross-pollination that I’ve thought about or tried so far:

Roadmap: I started by creating a personal roadmap outlining the VC skill-sets I wanted to improve throughout the year. I’ll need to regularly re-visit this roadmap in order to re-prioritize where I want to be focusing my time.

Venture Backlog: I’ve created a backlog of venture projects (for myself and a few members of the venture team) that I cost and prioritize so that I can actively work on top-priority projects during any rare down-time I have.

Sprints: I need to do a bit more thinking about this one. It’s easy to fantasize breaking down my workflow into sprints / sprint tasks but my weeks can be spontaneously unpredictable, especially if we’re considering an investment where the funding round is moving quickly. This leads me to believe that the traditional product sprint cycle would break far too often to be accurate or even necessary.

Specs: It’s not an exact parallel but I’ve tried to structure writing my investment memos as if I were writing product specs. There’s not as much team collaboration around memos (we’re generally expected to have filled out the majority of our memos with our own points of view) but we’re expected to be just as thorough and think through all “edge cases.”

UX: I’m always looking to improve the “user experience” for founders. I never want a founder to leave a meeting feeling like they’ve wasted time with me. I’ve been experimenting with various methods of feedback – one passive strategy was creating a Typeform that I link in my e-mail signature. Lot of clicks but no responses yet (I may shift to simply linking to this Typeform in my rejection e-mails to founders)

My e-mail signature

TBD: I’m going to keep this a living post and update accordingly as I experiment with more cross-pollination in the upcoming months

If you want some more inspiration around the importance of cross-pollinating, check out Scott Adams’ book “How to Fail at Almost Everything and Still Win Big.” For those who don’t know, Scott is the original creator of the Dilbert comics and this book is a peek into his life journey from his humble origins into the comic superstar that he is today.

It’s a great feel-good story: a seemingly average underdog overcomes potentially career-ending voice & hand health issues, works consistently on nights/weekends at his craft, and finally gets the break he needs.

More importantly, there are a few pieces of “career advice” that he sprinkles throughout the book. One particular non-traditional recommendation he gives is to forget about becoming the best at one specific thing and instead become very good (top 25%) at two or more things.