Silicon Valley and Failure

I forwarded the following article to one of my entrepreneur friends:
http://www.siliconvalleywatcher.com/mt/archives/2009/06/vinod_khosla_to.php

She asked:

Does the Valley really have that much of a cushion for failing? It’s not apparent to me that it’s any different than the rest of the world!

Here is my response:

It is and it isn’t.

On one hand, the VC model is based on failure. They invest in 10 companies, 2 make it 7 don’t and one is a home run. So generally VCs are ok with entrepreneurs that have failed a couple of times and believe that builds experience. Some entrepreneurs even see failures as a badge of honor. Its not much of a problem to have failures under your belt.

At the same time, VCs are pretty unforgiving of the entrepreneurs who run their portfolio companies. The stakes are high and they don’t have a lot of patience for entrepreneurs who need to learn along the way. The aggressive ramp in personnel and company size as well as the narrow timeline they have to exit doesn’t leave a lot of room for entrepreneurs to grow as managers and business professionals. Often they are replaced, particularly if the business looks to be a success and is ramping quickly.

I’ve been lucky because although I’ve had VC funding, they haven’t controlled the company. Mike Herning, my angel investor and Chairman has been flexible in letting me bumble around long enough to figure out a business model. Most VCs don’t have that patience. And you can’t beat board meetings over a glass of wine.

About alexford

Alex Ford is an accomplished entrepreneur, angel investor and executive. He has led Praetorian Digital, the leading online media company in the public safety and security market, as CEO and President since 2001. Under his direction, Praetorian has launched more than 30 websites, including PoliceOne.com, FireRescue1.com, EMS1.com and CorrectionsOne.com – all the #1 digital media properties in their respective markets – and brought together more than one million first responders to create the world’s largest network for public safety.
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