Venture Capital Partners

Part
01
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Part
01

Case Studies - Venture Capital General Partners

The goal of this report is to determine what to look for in a General Partner of a venture capital firm, or what qualities to work on personally, by obtaining case studies of three of the top General Partners in VC firms, including details on experience, unfair advantage, and ruthlessness.

Neil Shen, Bill Gurley, and Alfred Lin are some examples of general partners in venture capital firms. They are part of two of the most reputable Venture Capitals in the world (Sequoia and Benchmark). They have in common discipline, focus, sharp minds, and vision. Lee Fixel, of Tger Global Management is another example.

1. NEIL SHEN — 52 years old.

  • Shanghai-born Neil Shen is the founding and managing partner of Sequoia Capital China since 2005.
  • He is a graduate from Shanghai Jiao Tong University with a degree in applied mathematics. He later received his mater’s degree from Yale.
  • Shen worked as an investment banker for eight years at Deutsche Bank, Hong Kong, Chemical Bank, Lehman Brothers, and Citibank 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 Sequoia's success in China, a region where other established Silicon Valley venture capital firms have failed to get traction.
  • Alibaba Vice Chairman Joe Tsai added that “from 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.”

Years of Experience

Years of Angel Investing Experience

Unfair Advantage

  • Shen was a successful entrepreneur himself earlier on in his career, co-founding travel site Ctrip.com, before joining Sequoia. (S2)
  • Number one on Forbes’ The Midas List of the best dealmakers in high-tech venture capital in 2019, and "100 Greatest Living Business Minds" in 2017.
  • Math Prodigy.
  • Shen has reportedly an ability to take the long view and was one of the early investors on now popular online services in China, such as Alibaba and Tencent.

Personality

  • Colleagues, investors, and competitors describe Shen 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; staff must be prepared for “detailed questions from the boss 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.”
  • Jixun Foo, a managing partner of GGV Capital, 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.”
  • A managing partner of a Beijing-based venture capital firm. “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.”
  • A rival mentioned that “No 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.
  • GGV Capital’s Mr. Foo: said, “there 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.”

2. BILL GURLEY — 53 years old

  • His early career was as a design engineer at Compaq Computer Corp. He then went on to work as a top-ranked research analyst in Wall Street, then spent three years at CS First Boston, focusing on personal computer hardware and software, before entering the venture capital business.
  • He has been a General Partner at Benchmark for over ten years. Before Benchmark, he partnered with Hummer Winblad Venture Partners.
  • His long-term interest was always to become a VC investor, even trying and failing to get a job at Austin Venture before going to Wall Street in the early 90s.
  • He was one of the early investors in Uber and reaped one of the biggest paydays in venture capital history, an amount estimated to be more than $600 million.
  • Gurley is considered the catalyst for the resignation of Uber founder and former CEO Travis Kalanick, which is not usual for venture investors.
  • He has an MBA from the University of Texas, 1993; and a bachelor's degree in computer science from the University of Florida, 1989. Chartered Financial Analyst.

Years of Experience

Years of experience angel investing

Unfair advantage

Personality

  • According to Matt Maloney, founder, and chief executive of Grubhub Inc., Gurley is “an extremely powerful ally. He thinks strategically and sees around corners.”
  • Gurley is known for an acid wit and friendly, easygoing demeanor.
  • When discussing the situation with Uber and Gurley 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 to students at the University of Texas about how to “Succeed and Thrive in a Career you love,” he said that the five most important aspects include finding your passion, honing your craft, developing mentors in your field, embracing peer relationships in your field, and always being gracious and humble.
  • One statement that stands out is, 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 stated 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."

3. ALFRED LIN — 46 years old.

Years of Experience

Years of experience angel investing

Unfair advantage

Personality

  • In his Sequoia profile, he stated that “I find a variety of products and technologies interesting, but what they have in common is that they have disruptive business models.”
  • During an interview, he claimed 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 mentions that "The 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."

Lee fixel

  • Lee Fixel became a partner at Tiger Global Management in 2006. This gives him 13 years of experience. Since he is only 39 years old, he got involved with venture capital at an early age.
  • On June 30, 2019, Fixel left Tiger to possibly start his own firm.
  • Fixel is known to have an aggressive approach to investing and at times will decide to invest after just a brief Skype session with entrepreneurs.
  • Fixel has been described as ruthless when making investment decisions. He does not let emotion play apart in his decisions.
  • Reporting indicates that Fixel had promised a further investment in a company called Letsbuy, but did not follow through when he found another company he preferred to invest in.

ANALYSIS

  • Rational, dedicated, sharp, and visionary seem to be common characteristics among the case studies analyzed. One feature that is common in all the cases above is the individuals' ability to own up to mistakes and do something to fix them.
  • They also tend to take calculated risks, such as in the case of Alfred Lin personally investing in Uber after Sequoia passed on the opportunity. An ability to see further than most combined with strategical and focused thinking seems to be the great connector between the Venture capital partners presented. The “go-getter,” “never-give-up” attitude is also a recurrent trait, along with the quick and face-to-face meetings, present in 2 out of 3 cases.

RESEARCH STRATEGY

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 4 VC partners (except for Lee Fixel) for the report.
Information about the personality (or how ruthless) of Alfred Lin was a little sparse. However, we found some interviews that allow us to understand enough about him to conclude, and we included them in the report.
Part
02
of two
Part
02

Qualities for Success - Venture Capital General Partners

Some qualities of a successful general partner at a venture capital firm includes: Confidence, Conviction, Optimism, Drive & Passion, Vision, Discipline, Courage, Authenticity, Fearlessness, Willingness to Learn, Flexibility, Intelligent Risk Takers, Aiming and Thinking Big, Intellectual curiosity, Stamina, Strong networking skills, Emotional regulation, and Open-mindedness. The examples of a successful general partner that exemplifies these traits are: Peter Thiel (President, Clarium Capital; Chairman, Palantir and Partner, Founders Fund), Chris Sacca (Lowercase Capital) and Peter Fenton (General Partner, Benchmark), Danielle Strachman (General Partner, 1517 Fund), Josh Kopelman (First Round Capital), Reid Hoffman (Partner, Greylock Partners), and Marc Andreessen (Co-founder & General Partner, Andreessen Horowitz). Below is our deep overview.

CONFIDENCE AND CONVICTION

  • According to Chris Sacca, Proprietor of Lowercase Capital, having confidence and conviction, without a doubt is one of the basic qualities of a successful partner at a venture capitalist firm.
  • The general partner of a venture capital firm has conviction in that he must be able to maintain excitement in the face of opposition and skepticism.
  • Great venture capitalists never say maybe, instead they find a balance between gut-based decisions and methodical/data-oriented decisions, which allows them to choose between two options either to pass or invest.
  • “If you look at the greatest companies in our portfolio, and compare them to the ones that haven’t planned out, the one thing that sets apart the greatest founders is the feeling of inevitability of their success; they just know it’s going to work out”.
  • A successful partner has no doubt in their voice as they speak in a clear future tense on how something is going to work and gives reasons.
  • The general partner in a venture capitalist firm has in their bones a confidence and conviction of the inevitable success of their company.
  • Also, according to Peter Fenton, Partner at Benchmark, “A partner needs to have a solid foundation and confidence in what they are doing”.
  • Kiersten Green, Founder & CEO, Forerunner Ventures says “Confidence also plays a major factor as investors aim to partner with confident founders who are able to lead and navigate an active conversation”.
  • Examples of a successful general partner that exemplifies these traits are; Peter Thiel (President, Clarium Capital; Chairman, Palantir and Partner, Founders Fund), Chris Sacca (Lowercase Capital), and Peter Fenton (General Partner, Benchmark).

DRIVE & PASSION

  • A successful general partner at a Venture Capital Firm is driven, passionate, and is genuinely excited by new ideas, innovation, and entrepreneurship.
  • A driven partner is always ready to go full time on things, and he does so with passion.
  • According to Danielle Strachman, General Partner at 1517 Fund and Co-founder of the Thiel Fellowship, a fund that offers students $100,000 over 2-years to drop out of school and pursue their entrepreneurial dreams, “I love to see people working on things because they’re truly passionate and interested and not because they think it’s a popular idea”.
  • She went further to say that for one to be a partner they have to be really passionate about what they’re doing and wedded to it and this should be done always.
  • Examples of a successful general partner that exemplifies these traits are Danielle Strachman (General Partner, 1517 Fund), and Josh Kopelman (First Round Capital).

INTELLECTUAL CURIOSITY

  • Another quality of a successful general partner at a venture capitalist firm is being curious and having a thirst for knowledge and learning.
  • Successful Venture Capitalists should be continually clued in developing and emerging innovations and product trends, which requires steady learning because as an investor, no one can really tell what pitch is getting through the entryway next.
  • The best general partners at Venture Capitalist firms are both broad and deep in their insight bases and are available to new thoughts, and perspectives.
  • The degree/level of intellectual curiosity an individual has been a key pointer of whether they will initially enjoy doing VC and be any good at it.

AUTHENTICITY, FEARLESSNESS & WILLINGNESS TO LEARN

  • According to Peter Fenton who is a Partner at Benchmark, authenticity, fearlessness, and willingness to learn are the three key traits to look out for in new entrepreneur/venture capitalists.
  • Most business people today are unfortunately promotional and lack authenticity which is a gut feeling.
  • Examples of partners that displayed authenticity include Travis at Uber or Evan at Snapchat. The intensity and authenticity of Evan aged 21 in what he was building were captivating.
  • Fenton went further to state that "Besides, I think the characteristic that extraordinary business partners and visionaries have is fearlessness or fearsomeness.
  • There should be something crazy in terms of recklessness, power, and irreverence. A ton of incredible partners and founders are dropouts as they would prefer essentially not to get reviews in a framework, which they didn't make.
  • Another characteristic is an attitude which is looked for in a business person and this is a learn-it-all, and not a know it all or smarty-pants, approach.
  • Willingness to learn is a striking characteristic that is basic among the absolute best individuals, be it Mark Zuckerberg or Jack Dorsey.
  • These two are compelling basic masterminds; they are continually posing inquiries, asking questions and listening and that drives their long term success.
  • Examples of a successful general partner that exemplifies these traits are Peter Fenton (General Partner, Benchmark), Mark Zuckerberg, and Jack Dorsey.

INTELLIGENT RISK TAKERS

  • Successful general partners in Venture Capitalist firms are those who are not afraid to take intelligent risks.
  • These risks are the ones with a reasonable drawback, they have an upside, and they are where the partner can get an early sense that it is not deadly.
  • When a partner stops taking risks, they begin to die, decline, and inertness takes hold of their business and life.
  • Since Venture Capitalists are always assessing risk vs reward to obtain the best return across the business, being able to take calculated risks must be practiced.
  • Venture Capitalists select potential out-performers rapidly by creating qualities and key metrics they look for during the selection. Additionally, to do this right, VC has a decent comprehension of various purchaser and market patterns to minimize timing risks and market sizing.
  • The partner needs always to ask himself how he/she can go about taking intelligent risks that can have a breakout and positive results.
  • Examples of a successful general partner that exemplifies these traits are Josh Kopelman of First Round Capital, Reid Hoffman (Partner, Greylock Partners, Co-founder and CEO of PayPal, Co-founder of LinkedIn, and Airbnb).

EMOTIONAL REGULATION, FLEXIBILITY & COURAGE

  • A successful partner has to have courage which is not giving up in the face of adversity, but just being absolutely determined to succeed.
  • Investors are strongly biased towards partners who are so determined to succeed that they never give up and never quit, and this has to be fundamentally deep in the partner’s character.
  • Great partners are those who remain stubborn, but also are flexible, this is, being focused on a vision and doing everything possible to achieve it. Yet they are flexible in that they listen to customers and can be adaptable, listen to the market, their colleagues, and what the network says.
  • A successful general partner is able to highlight and analyze desires, motivations, intangibles, and needs.
  • To be a great partner and Venture Capitalist that people would like to work with, it is ideal to abstain from seeming to be merciless (which is a typical analysis of Venture Capitalists).
  • Be that as it may, while the best Venture Capitalists have emotional connections and positive relationships with their portfolio companies/organizations, they don't let this influence their basic decisions when it comes to time to take care of business.
  • Examples of a successful general partner that exemplifies these traits are Marc Andreessen (Co-founder & General Partner, Andreessen Horowitz), Steve Anderson (Founder & Managing Partner, Baseline Ventures), among others.

Sources
Sources

From Part 01
From Part 02
Quotes
  • "Being a successful entrepreneur isn't just about having a good product or knowing your KPI's. One of the best ways to gauge a successful company is its ability to raise funding from venture capitalists and private equity investors. "
  • "For most investors, however, a lot of it comes down to the individual entrepreneurs who are giving the pitch. Specs and product features are great, but if the team behind it doesn’t possess certain key traits, the company will inevitably fail. "