Case Studies - Venture Capital General Partners

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Case Studies - Venture Capital General Partners

Neil Shen, Bill Gurley, and Alfred Lin are three examples of general partners in venture capital firms.

Findings

A. Neil Shen

1. Overview

  • Neil Shen is a 51-year-old venture capital partner.
  • He was born in Shanghai and has been the founding and managing partner of Sequoia Capital China since 2005.
  • He is a graduate of Shanghai Jiao Tong University and holds a degree in applied mathematics. He later received his Master’s degree from Yale.
  • Shen worked as an investment banker for eight years at Citibank, Deutsche Bank Hong Kong, Chemical Bank, and Lehman Brothers before becoming an entrepreneur and co-founding Ctrip, a flight ticket and hotel booking platform in 1999 with James Liang.
  • Industry executives say that Shen is one of the main reasons for the success that Sequoia has had in China, an area where other venture capital firms based in Silicon Valley has struggled.
  • According to Joe Tsai who is Vice Chairman for Alibaba: “[F]rom day one, Sequoia had the right model. They picked Neil—who can identify founders and products that work in China—and gave him full autonomy.”

2. Years of Experience

  • Shen has  28 years of experience dating back to 1991.
  • Shen has  14 years of angel investing experience dating back to 2005.

3. Unfair Advantage

4. Personality

  • Neil Shen was described as "King Midas of China."
  • A founder that Shen traveled to meet stated had this to say about him: "Neil and the other partners are flying all the time to meet with companies. Once they came to talk to me but had to meet with several other founders that day, so they just brought all the other entrepreneurs to our office."
  • Another source explained that "while another top U.S. firm . . . has seen a wave of partner turnover in China and other imports have struggled to raise their profile, Shen has consolidated power and built a juggernaut."
  • Competitors, investors, and colleagues describe him as a “razor-sharp thinker, a shrewd strategist and a ruthless dealmaker who has no time for small talk and seldom shows emotions.” He is also known for being very rational.
  • Working for him can be intense, as colleagues have to be ready for his “detailed questions . . . during Monday morning calls and unexpected midnight meetings in hotel lobbies. Mr. Shen also is known for his lightning-fast replies to emails and messages any time of the day.”
  • The Managing Partner of GGV Capital, Jixun Foo, stated that “Neil is not afraid to make risky bets. And he is not afraid to exit if he no longer sees the value. He doesn’t get caught up in the emotion of it.”
  • Foo further stated: "“[T]here are people who reach a certain point and say, ‘I have enough.’ But Neil continues to strive for more. In that sense, he is a role model for us.”
  • The managing partner of a venture capital firm based in Beijing said that “Neil is thinking about deals 24/7, and he doesn't mind having many quick meetings with founders if making them feel special can lead to better deals and discounts for Sequoia.”
  • One of Neil's business rivals mentioned that “[n]o matter how hard Neil chases you before the deal if you don’t keep winning, you won’t get to see him again. He doesn’t have time for underdogs.”

B. Bill Gurley

1. Overview

  • Bill Gurley is a 53-year-old venture capital partner.
  • In the early days of his career, he worked as a design engineer for Compaq Computer Corp. He later worked on Wall Street as a research analyst and then worked for three years at CS First Boston where he specialized in computer software and hardware.
  • He has been a General Partner at Benchmark Capital for more than 15 years. Before Benchmark, he partnered with Hummer Winblad Venture Partners.
  • His long-term goal was always to become a venture capital investor, as demonstrated by the fact that he tried, but did not succeed, in landing a position at Austin Ventures before going to Wall Street in the early 90s.
  • Gurley was among the first to invest in Uber, for which he earned one of the largest payouts in the history of venture capital (over $600 million).
  • Gurley led the call for Travis Kalanick, the former CEO and founder of Uber, to resign.
  • He has an MBA from the University of Texas and a Bachelor's degree in Computer Science from the University of Florida. He is also a Chartered Financial Analyst.

2. Years of Experience

  • Gurley has  30 years of experience dating back to 1989.
  • He has  22 years of angel investing experience dating back to 1997.

3. Unfair Advantage

  • During his time at Wall Street, he earned "a reputation for blending his technological know-how with financial modeling."
  • Gurley is also recognized for being "the first to call Dell Computer’s comeback."

4. Personality

  • A prominent example of Gurley's ruthlessness involved his decision to remove Uber's former CEO, Travis Kalanick, from his position, which ultimately transpired (Gurley sat on Uber's Board of Directors). As one source put it: Gurley "made a choice: Kalanick had to go, and if the board wouldn't — or couldn't — do it, he'd find another way."
  • In further regard to Gurley's decision to remove Kalanick from his CEO position, Gurley sued Kalanick. Gurley's decision was so bold that a source described it as "something practically unheard of in the insular business world of Silicon Valley."
  • Gurley has also been described as an "outspoken giant."
  • According to the CEO and founder of Grubhub, Matt Maloney, Gurley is “an extremely powerful ally. He thinks strategically and sees around corners.”
  • Gurley is known for his wit and friendly, easygoing demeanor.
  • In discussing the Kalanick situation involving Uber and Gurley's role in it, Frank Quattrone stated that Gurley was incredibly candid about his experience there, warts and all, displaying humility and ability to learn from his mistakes. In an environment where some leading VCs defer to founders to a fault, he was willing to stand up for the values he believed were right, even if it risked his relationship with founders more broadly."
  • During a presentation at the University of Texas to students about careers, he said that the five most important aspects include finding one's passion, honing one's craft, developing mentors, embracing relationships with peers, and being humble and gracious. He also advised students to be obsessively curious about your field. Consider it your obligation to learn everything you can about it."
  • While most VCs chose to display optimism publicly, Gurley has argued "that high-tech is in the midst of an unsustainable bubble that is" about to pop.
  • He stated that he prefers to do meetings face-to-face, saying “your ability to persuade someone if you have face-to-face time is so much higher.”
  • In a 2017 interview, he said I love the venture game. I love entrepreneurism, I love technology, I love betting, I love investing."

C. Alfred Lin

1. Overview

2. Years of Experience

  • Lin has  23 years of experience dating back to 1996.
  • He has  20 years of angel investing experience dating back to 1999.

3. Unfair Advantage

4. Personality

  • An early example of Alfred Lin's tenacious business mindset came when he was in college. Lin bought pizzas and then resold them for more money. This led the pizza maker (who later became his business partner as they founded Zappos) to become very upset.
  • As Lin explained: "Tony [the pizza maker] was very upset that he would calculate how much he made per hour and I made technically more than him per hour and he was doing all this hard work." Nonetheless, Lin continued his pizza-resale operations, which he described as "all I did was go downstairs and pick up a pie and bring it upstairs."
  • Lin's strong approach is also illustrated in his description of his firm's investment approach, which speaks to his mindset as well: "We help the daring build legendary companies. Our style is not for everyone."
  • He continued the aforementioned quote by saying: "We push when we see potential. We are direct. Some don’t like our approach."
  • Lin also stated the following, which speaks to his bold business attitude: "A team needs to have both fire and ice. You want to have a burning personal desire to fix an important problem the rest of the world has gotten wrong, and you also want to be calm, cool and collected to execute well."
  • During an interview, he explained that "to develop your competitive advantage, execute and win, you have to be clear-minded about your realities, focused on the few things that matter most and take a disciplined approach. That’s the difference between an amateur and a professional."
  • He also mentioned that "[t]he business world is humbling, and there are few hard and fast rules. You can be right and lose money, or be wrong and make money. Being wrong is a daily occurrence. If you are not willing to admit that you’re wrong and correct your mistakes, you won’t get very far."

Your Research Team Applied the Following Strategy:

We supplemented the previous research brief by finding three additional examples of ruthlessness for each of the above venture capital partners. Ruthlessness can be demonstrated in both word and action. Thus, we included examples of both for the venture capital partners. The three new examples of ruthlessness for each partner are listed first in the "Personality" sections of our research findings. We found that information about their ruthlessness through articles, an interview transcript, and biographies. The rest of the information is what was provided in the previous research brief. The case studies presented were chosen based on the list previously presented during the strategy phase. To portray the best possible (or most successful) cases, we chose the top-three venture capital partners.
Sources
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