Steve Blank Discusses the Skills Required to Be an Effective Venture Capitalist

Author: John Greathouse
Published: January 07, 2012 at 5:46 am
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I recently had the pleasure of speaking with Steve Blank, author of Four Steps To The Epiphany, Stanford Professor and noted entrepreneur. Steve was very generous with his time, allowing us to cover a variety of topics during our Skype conversation. The subject discussed in the video below is Steve’s belief that Venture Capitalists should begin their careers as operational entrepreneurs.

You can watch my interview with Steve below:

During the fall of 2011, Steve wrote a controversial post entitled, Why VCs Should Be Startup CEOs. If you have not yet read it, take a moment to do so now. It is a brief and worthy read.  

Steve identifies the following skills as necessary for success as a venture capitalist:

  • People skills (ability to recognize patterns of success in individuals and teams)
  • People skills <again>
  • People skills <and again>
  • Market/technology acuity (patterns of success, domain expertise)
  • Rolodex/deal flow (deal sourcing/ability to make connections for the portfolio)
  • Board skills (Startup coaching, mentoring, strategy, operational/growth)
  • Fundraising skills

Steve annotates his list by stating that:

Some of these skills are learned in school (finance), some are innate aptitudes (people skills), some are learned pattern recognition skills (shadowing experienced partners, hard won success and failures of their own), and some are learned by having operating experience. But none of them are substitutes for having started and run a company.

Interestingly, even the non-people skills on Steve’s list are highly dependent on a person’s interpersonal capabilities. Raising money, managing a Board and establishing a strong Rolodex are all facilitated by an ability to effectively empathize and communicate.

CEO Or Nothing?

Steve’s article struck a particular chord with me. Although my career includes over 15-years of startup operational experience and I was responsible for nearly every role at my various startups, I never held the CEO title. As such, I was curious if Steve felt that a venture capitalist had to be a former CEO in order to be optimally effective or if he gave equal consideration to the merit of other senior executive roles. His response was interesting. 

“The post wasn’t mean to be dogmatic. It was just an observation of what I’ve seen, about young VCs in particular and the length of time it takes them to actually understand what it is they are doing. Most of them pick it up fairly quickly…but some of them spend their whole careers never understanding what business they are in and think of it as a financial asset class.”

Continued on the next page
 
 

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Article Author: John Greathouse

John Greathouse is the author of the hands-up startup advice blog infoChachkie (http://www.infochachkie.com) He has held a number of senior executive positions with successful startups which generated more than $350 million of shareholder value. …

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