Vinod Khosla, the founder of Khosla Ventures, one of the top venture capital firms in Silicon Valley, was interviewed in the New York Times recently on the topic of entrepreneurial vision. I find his views on entrepreneurship and Silicon Valley culture (Silicon Valley as a state of mind) interesting. In short he said, “You want missionaries, not mercenaries –passionate, maniacally-focused founders who believe in a vision. Founders like this draw the most gifted and passionate employees, who maximize the chance of success, even if they ultimately fall short of their initial goals and get acquired.”
While acquisition is what happens to the vast majority of successful technology startups, he objects to that being a goal in itself. He goes so far as to say, “I think that mindset does a disservice to the entrepreneurs in Silicon Valley and around the world.” He calls out specifically “the deal mentality [that] is a Wall Street specialty and doesn’t fit the valley culture.” I always enjoy these east versus west coast business cultural barbs that get slung around. I was recently at the at the Venture Forward angel venture conference in NYC blocks away from Wall Street. Many of these NY angels are former Wall Streeters and are very much on the startup bandwagon as early stage investors. It would have been interesting to poll them on how many would be happy to advise their entrepreneurs to build a good business and sell it versus the big, world-changing vision that could take a long while to materialize.
But Kholsa has a good point. “Imagine in 1980, if the highest goal of every start-up was to be bought by DEC or IBM for $20M in a couple of years. I’d assert that we’d still be in the Stone Age of high tech – using mainframes and cell phones that bolt to the floor of your car – no Internet, no biotechnology, no e-mail, no computers in the home, much less in your pocket. Imagine a world if Google was sold to Microsoft.”
Wow, hard to contemplate. When making investments for the Citrix Startup Accelerator, I must agree that entrepreneurs that are driven by a bigger vision, not the short term flip, are the types of people that can build great teams and go on to bigger successes. There is nothing wrong with acquisition if it makes sense as a next step to follow your vision. But if that’s your aim from the get-go, you are probably not a good fit for us.