The obsession with investing careers has moved from misplaced to unhealthy
Terry Nguyen wrote about the allure of venture to young grads in Dirt. It’s a good piece about the various Gen Z VC groups generally (go read it and then subscribe to Dirt) but there was one section on why these groups have proliferated that felt particularly salient to me:
the mechanics of the role — attending conferences, lunching with founders, writing industry theses, tweeting — offers more immediate social prestige and recognition. Young investors are capitalist tastemakers. And clout, like economics, is a game of supply and demand.
The social element of the job also sets VC apart from traditional roles in finance, where junior employees function as quiet cogs in a well-oiled machine. These optics can seem exciting, especially to impressionable grads. “You get to travel, meet founders, speak on panels, and lead deals,” James said. “With social media, you’re seeing this status inflation [for VCs] overnight.”
If this speaks to you, if the job outlined here is alluring to you, please for the love of god stop and think very carefully. VCs, especially young ones with little to no decision making power within their firms, are not tastemakers or influencers. They are analysts and BDRs.
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None of what is described here (travel, tweeting, lunches, etc.) will make you a better investor or give you any longevity. All the cool, glamorous parts of the job are incidental to doing it well, especially in the beginning of your career. Yet this persistent fascination/obsession with working in venture is unshakeable, despite my best efforts.
A few years ago I wrote Don’t Work In Venture Capital and I stand by it. It’s good and smart and correct (like everything I write) so you should read it. To summarize:
The jobs are hard to get
If you get one, they’re mostly not great jobs
If you get a good one, there’s very little upward mobility
If you get promoted, you won’t make as much money as you think you will
Mind you, I wrote all that in 2019, in the midst of a generationally strong bull market. All of those factors just got 10x worse in the last 6 months and figure to stay that way for the foreseeable future.
Venture over the last decade was about “software eating the world,” exploiting the arbitrage between real and perceived opacity, and the belief that if we only scaled the amount of capital 10x the number of major outcomes and important companies would also go up 10x. Firms functionally dropped the “venture” and transitioned to just “capital” (h/t Sam Lessin). In doing so they got big, fast.
As the perceived number of important companies increased, so did the (perceived) number of firms, partners, and junior investors necessary to cover and capitalize them. There would be more seats to go around. There’s room on the money carousel for everyone!
But now we’re on the precipice of a period of profound contraction.
So if you’re in one of those junior seats (and frankly if you’re in a mid-level or junior partner seat like I am) you should be planning for a diminished graduation/retention rate within venture. Plan for that and guard against it. Try to become a good investor who can actually make the right investment calls when not everything is instant markup (downround machine go BRRRR).
And if you’re not in venture and think you want to be, follow the advice I’ve laid out already about what to do instead (at least give it a good hard think).
If your plan is to be valued within your firm primarily for your youth (or plan to get a job on that basis) you're eminently replaceable, increasingly so as you age. You are setting yourself up as a piece of marketing for the firm, not an investor.