Venture Capitalist Aptitude Test

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I took Guy’s test today. I scored a 36.

According to Guy’s scoring algorithm:

Here’s how to assess your readiness to become a venture capitalist:

• 40 or more points: Call CalPERS and tell them you’re raising a new fund.
• 35 to 39 points: Call Sequoia and Kleiner, Perkins and tell them that you’re available.
• 25 to 34 points: Send your resume to 2,000 venture capitalists and pray.
• 24 points or less: Work until you can score higher, keep flying on Southwest Airlines.

This test was pretty revealing, especially Guy’s explanation of work and educational backgrounds and also about life experiences. Many current VC’s have backgrounds that Guy believes aren’t the right backgrounds to be a decent Venture Capitalist that really wants to help the portfolio company — it’s about the success of the portfolio company and about the customer. About educational backgrounds, Guy believes:

The three worst backgrounds for a venture capitalist are management consulting, investment banking, and accounting. Management consulting is bad because it leads you to believe that implementation is easy and insights are hard when the opposite is true in startups. Investment banking is bad because it leads you to believe that everything can be reduced to cells on a spreadsheet and that companies should be built for Wall Street, not customers. Plus, investment bankers are oriented towards doing deals, not building companies. Accounting is bad because it leads you to believe that history not only repeats itself, it predicts the future.

Regarding the MBA, Guy believes,

The downside is that earning this degree (and I have one) causes most people to develop the hollow arrogance of someone who’s never been tested. All told, the downside of an MBA outweighs the upside.

On to work experience,

You may have been in the right places, but you also need the right experiences in those places. Specifically, have you gone through these?

• Been kicked in the groin by a major, long-lasting economic downturn, so that you know how powerless you are. (add 1 point)
• Worked at successful startup, so that you can speak first-hand about the ecstasy of entrepreneurship. (add 1 point)
• Worked at a failed startup, so that you understand three things: first, how hard it is to achieve success; second, that the world doesn’t owe you a thing; and third, what it’s like to be fired or laid off. (add 3 points)
• Worked at a public company, so that you know what the end goal looks like, warts and all. (add 1 point)
• Held a CEO position, so that you have this fantasy experience out of your system and will not try to run the startup from a board position. (add 2 points)
• Been an angel investor with your own money, so that you understand the fiduciary responsibility of investing other people’s money. (add 2 points)

A lot of fun. After looking through a few VC websites today, I estimate that ~45% – ~50% of the current VC’s in Utah are what Guy would consider to be VC’s that shouldn’t be VC’s. Interesting.

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