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Conservative Entrepreneurs Suck?

December 9, 2007

According to Saar Gur the ‘old guard’ i.e. guys who started companies and raised venture capital in the late nineties (like me) are not being bold enough in their business decisions and it’s hurting their startups. More and more venture capitalists seem to be agreeing with his thesis, suggesting that ‘entrepreneurs from the first bubble are overly cautious, and are hurting their businesses.’ Mike Arrington wrote about his conversation with Saar in a post titled, “The Twice Shy Entrepreneur.” Of course, my first thought is that the critique is a little self-serving.

Mike explains that the ‘New Guard’ don’t carry the burden many of us faced when we had to call angry investors, laid off employees, appeared in bankruptcy court and were trashed in FuckedCompany ~ instead he suggests ‘they’re optimists, as any entrepreneur should be, they have no baggage.’ He is right. But is that the only reason the old guard is being more conservative? Maybe we are older, wiser, wealthier and have more kids?

Of course, most venture capitalists have eight to ten startups at any one time and at the end of the day they only need one to work. The job of a VC is convince entrepreneurs to swing for the fences everytime they get to bat. The job of an entrepreneur is to figure out when a single or double will work better. Saar is 100% right ~ the ‘old guard’ are more likely to be starting their businesses without the help of venture capitalists. Most of us are more likely to be able to bootstrap our ideas as opposed to the ‘new guard’ who don’t have that luxury. If I was in the VC game I would spend more time talking to the ‘new guard’ versus the ‘old guard’ primarily because they are more likely to want and need my money. The ‘old guard’ are less likely to want or need early stage money ~ the most expensive capital (i.e. the best deal for a VC).

My advice? If you are a new guard entrepenuer just keep doing what you are doing. If you are an old guard entrepenuer don’t buy into Saar’s thesis ~ you have a better understanding of your business and are in the best position to decide when it is time to ’swing for the fences’. Stick to your guns. Raise money when you need it, don’t raise money because you get called a sissy by a few VCs. Ironically, Saar’s claim to fame was a company he started called Adteractive. He build that company to $120MM in revenue without any outside capital. Wonder if he was a little too cautious? Or maybe just very smart…

Written by Alexander Muse · Filed Under Blog, Startups 

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No Responses to “Conservative Entrepreneurs Suck?”

  1. michael Says:
    December 9th, 2007 at 6:33 pm

    I think all VCs right now are being too cautious in what they’re funding, period. People are telling me VCs are saying “come back later” - i.e. very conserative. So it stems from this that this it forces companies to build better working models. And when/if they do, much fewer of them will need or take funding.

  2. Alexander Muse Says:
    December 9th, 2007 at 6:48 pm

    Ironic…

  3. danny Says:
    December 10th, 2007 at 10:42 am

    hi alex..haha, u guys are spoiled. at least you *have* venture capitalists in your neck of the woods! here in sydney, we have sand..lots and lots of sand :D

  4. Robert Brackenridge Says:
    December 15th, 2007 at 12:57 am

    It might be interesting to take a look at the Old Guard and New Guard vc firms to see if they line up with bubble ‘preneurs that are trying their hands at it again? It seems to me that most of the venture capital firms are looking for “capital efficient” deals which are already validated by the marketed. That doesn’t sound like swinging for the fences to me…

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