The Business of Venture Capital, 3rd Edition

29Serving on Boards

“The biggest consistent irritant in the boardroom were co-investors more intent on talking over management, rather than listening to them,” Donald Valentine, founder, Sequoia Capital, would say. Echoing the sentiment was Vinod Khosla, who spent his early investment career at Kleiner Perkins. “Most VCs have not done shit … they have never been at a startup or through tough times. Most VCs add zero value, some add negative value while advising CEOs,” complains Vinod Khosla, founder of Khosla Ventures.¹

OVERVIEW

In a narrative account of a business, there is only one hero. When we look at the plucky startup or entrepreneurial business venture, the company founder or CEO is deified as a visionary who forges a groundbreaking idea into reality against all odds. In this account, the CEO is the captain of industry, creating a dent in the universe with mighty volition and against all odds, building a brilliant management team that works tirelessly to craft the idea into a viable business. Cast into a secondary supporting role is the venture capitalist. And most VCs do not know how best to play this supporting role. How should VCs understand their duties and, more importantly, draw the boundary lines of their role as a board member?

VCs have often acted as egotistical overlords, pushing the CEO and offering bad advice. Good role models are rare in the business of venture capital. Picking the right role models and understanding their modus operandi is an essential ...