on the money

from Guy Kawasaki's blog: I could not agree more.

If you want additional proof that we’re in a bubble, here it is: young people are trying to get into the venture capital business again. I get several emails a week along these lines:

I’m about to graduate from college where I majored in economics. I’ve always been interested [what does “always” mean for a twenty-something year old, but I digress...] in business and entrepreneurship and ran my school’s entrepreneurship club. I’ve been working as an analyst for Goldman, Sachs, and now I’d like to get into the venture capital business to further my understanding of entrepreneurship and to help startups achieve success by tapping into my knowledge base. I am adept with PowerPoint, Excel, and PhotoShop.

They see a wonderful job: going to cocktail parties and networking events, flying in private jets, and getting sucked up to by entrepreneurs while pulling down a base salary of $500,000/year plus a piece of the upside of selling a YouTube for $1.6 billion. Who wouldn’t want such a job? (Frankly, I would too.)

First, a rare moment of Guy-Kawasaki humility: I am by no means “proven” as a venture capitalist. I’ve been in this game for about ten years, but I don’t have the mega-hit that “makes” a fund. Thus, I may not be a source of good advice about getting into this business, but when has the lack of knowledge stopped a blogger?

Regardless, here’s my advice to all the Biffs, Sebastians, Brooks, and Tiffanys who want to be kingmakers:

Venture capital is something to do at the end of your career, not the beginning. It should be your last job, not your first.

My theory is that when you’re young, you should work eighty hours a week to create a product or service that changes the world. You should not sit in board meetings listening to an entrepreneur explaining why she missed her numbers while you read email on a Blackberry and intermittently spew forth gems like, “You should partner with MySpace; I can also introduce you to a few of the losers in our portfolio.”

Furthermore, entrepreneurs should view any young person who opted for venture capital over “real world” experience with contempt. Why would you want advice from someone whose background consists of working in a college bookstore or cranking spreadsheets at an investment bank? Financial models are almost totally irrelevant because there’s no financial wizardry involved in making a good product and selling the heck out of it.