If you talk to enough venture capitalists, you’ll hear certain universal truths. For one thing, venture-backed companies provide something like 20 percent of all jobs in the U.S. Second, despite some contraction and a decade of generally lousy returns, the VC industry is as strong as ever. And, yes, the IPO and acquisitions markets could really heat up in 2011 after a couple of very tough years.
On a more personal level, you’ll probably hear all about the strengths of their firms’ portfolio companies (and the weaknesses of others’). You’ll hear that “super angels” are overblown in terms of their overall impact and competing with VCs for deals. And, of course, that any tax increase on carried interest (VC profits) is an abomination.
But—get enough VCs in a room together and ask more probing questions, and you’ll hear deeper stories and discussions. That’s just what Xconomy did last week at our “VC65” conference, which we organized in partnership with the National Venture Capital Association and the MIT Museum, and held at Kresge Auditorium at MIT. The idea was to celebrate the 65th anniversary of venture capital in America by bringing out insights and stories from some prominent VCs and venture-backed entrepreneurs—and nearly 1,000 people turned out to hear what they had to say.
Some pieces of the program I was already familiar with. Mick Mountz of Kiva Systems and Ajay Agarwal of Bain Capital Ventures showed their usual dazzling robotic-warehouse videos, with a twist—they also talked about a key early meeting between Kiva and Staples (before Bain invested in Kiva), which highlighted the importance of VC customer networks; Staples has gone on to spend some $20 million on Kiva products, and Kiva , which has raised $33 million in VC investments, recently became profitable.
MIT biotech and materials science inventor Bob Langer and Terry McGuire of Polaris Venture Partners talked about their “formula” for building companies together over the past 18 years. They said each of their 17 companies is based around six elements: a platform technology, products (not information), a key scientific paper in Nature or Science, patents (“to block everyone else”), in vivo data, and a core team of students, postdocs, and collaborators.
Henry McCance of Greylock Partners talked about his Cure Alzheimer’s Fund and implored VCs to use their skills and resources to transform society in a broader way—by focusing on their personal passion, whether it’s the environment, education, medicine, poverty, or hunger. “Over the last 65 years, you’ve changed the for-profit world,” he said. “Now change the nonprofit world.”
But there was also plenty of thought-provoking stuff I hadn’t heard before, from other luminaries across a wide range of fields. Now that I’ve had a few days for ideas from the event to sink in, here are my top 10 takeaways:
10. VCs aren’t bad singers. At least when they’re crooning “Happy Birthday” to themselves, as Bob Metcalfe from Polaris (and the University of Texas) famously led them to do early in the afternoon. It was a little surreal, but honestly, I’ve heard worse renditions. Much worse.
9. Traffic disrupts everything. Not just your commute. Metcalfe made the point that Internet traffic has disrupted everything from advertising to telecom, from music to television. The natural evolution of that trend, he says, is that the next wave of traffic across video, mobile, and embedded networks will disrupt three main industries—education, healthcare, and energy. (He didn’t say exactly how, but we didn’t give him enough time for that.)
8. Every company, especially a successful one, has its make-or-break moment. Howard Hartenbaum of August Capital told the story of Skype’s almost getting shut down by
