Culture of a VC firm

The other day I ran into a peer of mine who works in another VC firm. He casually remarked that the only difference in the performance of VC firms in the Silicon Valley eventually boiled down to the culture of the firm. I was quite bemused with this comment - the rationale being the top VC firms have uniformly "Top decile" talent, access to the same network (with marginal differences that crop up from time to time) and have a hugely overlapping set of smart investors (LPs). So, it eventually boils down to execution (as in any other industry). Of course, the discerning would know that in a small, staff driven firm (as in consulting/mutual fund/hedge fund), it comes down to the culture of the firm:

- process Vs results driven
- democratic Vs dictatorial
- meritocratic Vs gerontocratic
- open, transparent Vs opaque, hierarchical
- hierarchial Vs matrix
- conceptualization Vs execution
- homogenoity Vs heterogenity




There obviously are no easy answers for this on either side. It is a delicate balancing act and the better ones know how to mix and match this concoction according to the needs of the market. A sampling of the behavioural patterns can often give you valuable insights about which way the culture is inclined towards. Similar to what Malcolm Gladwell says in the Blink, the subtle differences are those that can be thin sliced and observed more through guttural signals than rational calls.

For example, how do the sub -ordinates react in presence of their superiors ? Is there a natural deference (through a turning of head towards the superior) after every point they make ? Is there eye contact with the others in a meeting ? Is there a forced fitting of roles based on hierarchy in a meeting ? Is there a complementarity of perspectives or do some people end up cuckoo-clocking what others say ? What deliverables is each person responsible for and is the monitoring process transparent ? Is there discord between the picture the outside world sees of the firm and the self-image the firm has of itself ?


It is amazing to think as to how meeting 2-3 people from a VC firm together/individually for even 5-10 minutes can tell you so much about the firm, its culture, the quality of people and most importantly, the quality of its investments.

Getting back to the beginning, apparently one measure of how VCs benchmark themselves on their culture is on the number of sparks that fly during a meeting - how tough is the questioning on individuals, portfolio companies and completion of tasks; Point certainly to ponder over.


~Varadha
(varadha.r1@gmail.com)