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that may be. I'd be interested in seeing your data, though, just for curiosity's sake.
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<p>It's not my data. It's Andrew Metrick's (2007) data.</p>
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although there are very successful NYC-based partners for DFJ Gotham and Greylock and other firms like Bessemer.
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<p>Uh, no they're not. Not really. DFJ Gotham is a subsidiary of DFJ, which is located in (where else?) Menlo Park, California. Greylock doesn't even have a NYC office at all. It has two headquarters: one in San Mateo, California; and the other in Boston (actually Waltham, but that's considered part of Boston metro).</p>
<p>Greylock</a> Partners - Contact Us</p>
<p>Bessemer, I grant you, is a NYC headquartered VC firm. And of course there are others such as Union Square Ventures. But the point simply is that the NYC venture capital community is dwarfed by that of California and Boston. For example, in 2008 2Q, 40% of all VC investment was committed in Silicon Valley. </p>
<p>Silicon Valley and the broader Bay Area, flexing its leadership status in technology during an economic downturn, accounted for a remarkable 40 percent of venture capital investment in the second quarter this year</p>
<p>Silicon</a> Valley takes lead in venture capital investment - People's Daily Online</p>
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I'm fairly certain FT Ventures has done exceptionally well, too, and they are definitely headquartered in NYC,
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<p>Again, that's highly debatable. I suppose it depends on what we mean by 'headquartered'; I generally take it to mean the office that houses the most political power, as measured by not the sheer plurality of partners, but also the more politically powerful partners. FTV Capital, formerly known as FT Ventures, has 7 partners, 5 of which actually work out of the San Francisco office, including both founding partners, the managing partner, and the COO/partner. Only 2 partners are in the NYC office, both of them being lower-level partners. Hence, I would strongly argue that FTV Capital is really a San Francisco headquartered VC firm. </p>
<p>FTV</a> Capital</p>
<p>FTV</a> Capital</p>
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to be fair, posting positive returns after fees and inflation is technically a valid metric for "success". "above-market" would be a goal but it's not a bare minimum.
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<p>I can't agree with that. Anybody can produce a positive rate of return (after fees and inflation) by just investing in TIPS. Anybody can (almost) match the market by just investing in an index ETF. If venture capital as an asset class is to actually provide benefits to its investors, it has to at very least be beating TIPS, and ideally should also be beating the index. </p>
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i mean, it's certainly not a bad gig. but if their motivations were purely to have the highest hourly rate, they would probably go into LBO/M&A/S&T - despite even the current troubles in the industry it's still a very secure, VERY well-paid position.
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<p>Actually, I would argue that VC may well make higher hourly rates than the functions you listed above, simply because they don't seem to have to work that many hours (certainly not as many as M&A, whose hours are ridiculous). Those other functions may therefore make more total pay, but the VC's are actually able to optimize their quality of life by still making quite high pay while not really having to work that many hours. </p>
<p>To give you an example, since you mentioned Bessemer, Felda Hardymon, who is a Senior Partner at Bessemer, also has time to serve on the faculty at Harvard, including active teaching. How many people working in M&A can reasonably do that? </p>
<p>Biography</a> - G. Felda Hardymon</p>
<p>Similarly, Pete Wendell, founder and MD of Sierra Ventures, teaches a course at Stanford.</p>
<p><a href="https://gsbapps.stanford.edu/facultybios/biomain.asp?id=04667829%5B/url%5D">https://gsbapps.stanford.edu/facultybios/biomain.asp?id=04667829</a></p>
<p>The point is that venture capital is one of the few industries in the world in which you can make a tremendous amount of money while still having a lot of spare time on your hands to do other things. It's a fantastic deal, which is why it is perfectly understandable why so many people want to get in. </p>
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My point is, I would think that at least PART of what makes top MBAs go into VC is nobler motivations having to do with greasing the wheels of capitalism. Not just exposure to the innovations of tomorrow, but a role in judging those innovations. I think there's some intellectual caliber to what they do, and moreover there is a sense of pride they bring to their jobs, even if the lazy bums merely put in 55-hour weeks. So I wouldn't be so quick to concede the OP's point that they're taking the easy way out rather than putting their talents to better use.
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<p>Again, I'm not saying that the system is detrimental overall. For all its structural flaws, VC, at least in the US, has been fantastically successful in terms of bringing innovative companies to exit. The US is the most technologically innovative nation in the world, and Silicon Valley is the most technologically innovative region in the country, and I certainly credit the venture capital community for playing a key role in enabling that innovation. The world would be a far poorer place, both in terms of wealth and in terms of social utility, were it not for the technologies that venture capital has commercialized. </p>
<p>But at the same time, the venture capital business model of this decade does seem to be broken, or at least is functioning in a highly suboptimal manner. Every year of this decade except for one (I think 2003) will probably produce sub-zero VC returns: not just sub-market returns, but sub-zero returns. I think every observer of the industry agrees that there is just too much money in the industry, meaning that there are too many 'me-too' funds investing in mediocre copycat firms and too many VC's who don't know what they are doing. Like I said, the top 10-20% of firms will continue to produce outsize - in some cases, monstrous - returns, and deservedly so. The problem is that the bottom 80-90% of firms will continue to pollute the market by driving up the competition in the space (hence forcing even the good tech startups to invest millions in countermarketing) and extracting rents from naive entrepreneurs.</p>
<p>But having said all that, I will agree that venture capital, for all of its flaws, and even talking about just the mediocre 80-90% of firms, is still clearly more central to the process of technological innovation than are most engineering jobs in the world. More importantly, venture capital jobs provide more opportunities to learn new things and advance your career than most engineering jobs. Sad but true. As I've always said, the real problem seems to be that most companies don't really provide great career tracks for their engineers. For example, I would argue that few top chemical engineering students want to have a job where their responsibility is just to squeeze out an extra 0.01% yield out of a refinery hydrocracker. I think most of them would be far more interested in working on product design and innovation.</p>
<p>Consider the painful but prophetic words of Nicholas Pearce, former chemical engineering student at MIT. </p>
<p>Even at M.I.T., the U.S.'s premier engineering school, the traditional career path has lost its appeal for some students. Says junior Nicholas Pearce, a chemical-engineering major from Chicago: "It's marketed as--I don't want to say dead end but sort of 'O.K., here's your role, here's your lab, here's what you're going to be working on.' Even if it's a really cool product, you're locked into it." Like Gao, Pearce is leaning toward consulting. "If you're an M.I.T. grad and you're going to get paid $50,000 to work in a cubicle all day--as opposed to $60,000 in a team setting, plus a bonus, plus this, plus that--it seems like a no-brainer."</p>
<p><a href="http://www.time.com/time/printout/0,8816,1156575,00.html%5B/url%5D">http://www.time.com/time/printout/0,8816,1156575,00.html</a></p>