The wolf will live with the lamb,
and the leopard will lie down with the goat.
The calf, the young lion, and the fatling will be together,
and a child will lead them.
– Isaiah 11:6
There is a good Matt Richtel piece in the NY Times this weekend highlighting a trend I mentioned here a while back: The covert VC fondness for asking their children and (younger) receptionists for investment advice.
A little of this sort of thing goes a long way, and as a trend it as admittedly limited to the go-go areas in IT/web investing — you don’t see it in biotech — but it is, nevertheless, an eye-opener if you weren’t aware that your favorite seven-figure venture guy/gal gets a good chunk of diligence done over the dinner table with his/her offspring:
The investors said consulting with younger people would have been
unheard of in the dot-com boom of the 1990s. Then, investors were
immersed in the very technology they were financing, ordering books on Amazon, downloading music from Napster and buying and selling on eBay.
But now, in the so-called Web 2.0 era, venture capitalistsâ€™ personal
interests have strayed from the sweet spot of innovation: Web sites
like MySpace intended to connect people, free Internet calling tools
like Skype or software for mobile phones.
Fair enough, as far as it goes, but the real story is that venture investing has become consumer-centric, young consumers in particular, and VCs are a) not young, and b) among the least representative consumers you’ll ever meet. The upshot is that they really have no choice but to find someone who can help them figure out what’s hot or likely to be hot, because left to their own devices they’d be investing in VR Rubiks Cubes and Duke Nukem clones.