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Vinod Khosla: Be Wary of “Stupid Advice”

Vinod Khosla Be Wary of Stupid Advice Stanford Graduate School of Business


Silicon Valley is full of consultants and venture capitalists who have never been a CEO or company founder. By and large, says Khosla, their advice is worthless. Although there are exceptions, the only people whose advice to an entrepreneur is worth heeding are those who have worked at a startup, he says. “And most VCs haven’t done that, so they give stupid advice. You know, if you got out of business school and joined a VC firm and grew up and eventually became a partner, you haven’t learned what it’s like to be in a startup,” he says. His company pushes new hires out the door after three or four years to spend time at a startup before they can return and have a shot at a partnership.

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Just working at one startup doesn't give a person a lot of wisdom.

After several startups you begin to get a feel for all the challenges a startup faces. 

I'd say that's a proven model for most any human endeavor... 

Which is why I wonder why someone would want to be a venture capitalist without first understanding startups. 

Hah!  Tell me when to stop:

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ ... ok, I got tired.

Better understanding leads to more money. 

Yes, yes, yes... I already agreed with that point from the beginning, but I was responding to your above musing aloud inquiry:

I wonder why someone would want to be a venture capitalist without first understanding startups...

Because as far as I can tell, the main attraction to becoming a venture capitalist and joining the industry has little or nothing to do with motivated new entrants who are seeking understanding and wisdom...

I see, they join venture capital because they want money.

Though no one who joins VC for that reason lasts long.

Not true.  

Yes, I agree that wisdom is the long tail of earning and sustaining financial success... but as Nicholas Nassim Taleb and direct experience proves – it's certainly not necessary in the least for a good enough majority to be motivated by making significant bucks and actually do so in the short and medium term completely lacking in any of it...

In fact, the majority of our financial industries are structured to function exactly in this way.  And more's the pity.

Couldn't they make more money if they understood startups?

We're saying similarly related things and I think we're also agreeing with each other, but in different ways: 

I'm sharing what I see as the status quo and you're sharing what you see as a preferred improvement upon it.

At least I know I'm agreeing with you, I'm not sure if you're agreeing with me...

I am. And you're right. I live in the future perfect tense. 

Hah, that's cool – cause I get paid to take people there!

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