Confessions of a Venture Capitalist: Inside the High-stakes World of Start-up Financing

Ruthann Quindlen writes a "lessons I learned on the way to the poor house" story about what to do correctly with start-ups by showing what can and does usually go wrong. Her perspective is from first hand experience in doing early-stage investing in Internet companies for the firm Institutional Venture Partners (IVP) in Menlo Park, California. You will find that her perspective is unusually encompassing: the pros and cons of the hot-house start-up environment of Silicon Valley; the role of excellent people and teams; the importance of large markets; having business models that allow for prosperity; how venture capitalists work; the role of the successful entrepreneur; the difference between a brilliant and a merely bizarre idea; the dumbest decision she ever made (to pass on investing in OnSale); negotiating with venture capitalists and bankers about valuation; the perspectives of other people she respects on these subjects; and on the Internet as an analogy to the Dutch tulip mania (she thinks the Internet is for real). She has a disaster story to underscore every point she makes. The points are valid, and the disaster stories are pointed and powerful.

Based on the business plans I receive for start-up businesses, I would say that more than half of this information will be news to the average entrepreneur who wants to get venture capital, go public, and make it big.

The information also matches what my venture capitalist friends tell me, and what I hear at conferences for Internet entrepreneurs.

As the book points out, you can learn all of your lessons the painful way in the school of hard knocks . . . or you can listen to what is said here and change your behavior. I recommend the latter. Things move too fast in start-ups relative to the burn rate (the rate at which you use up your money) to make unnecessary mistakes that delay your progress. Overcome your disbelief stall that the way to be a great success as an entrepreneur is to do what you've always done.


Little substance but many frivolous trimmings   April 26, 2001
8 out of 8 found this review helpful

In concept, Confessions of a Venture Capitalist, is a great book. Ruthann Quindlen's execution, however, is not - a fact that is particularly disappointing given her impeccable credentials as Wall Street's first dedicated PC software analyst, champion of new economy IPOs, and later venture capitalist at Silicon Valley's Institutional Venture Partners fund.

Despite repeated assurances in the introduction of the book that she will focus on the "mistakes made", and "lessons learned", as a VC, Quindlen invariably dwells on her successes as an early and enthusiastic proponent of the Internet, trotting out much tired industry folklore in the process. The mood is one of self-congratulation, accompanied by gushing praise for the venture capitalist industry. Her colleagues are billed as great characters, making "life and death decisions" on four hours sleep and 10 mile runs, investing their precious time and effort into making each portfolio company a resounding success. Indeed, if Quindlen's book reveals anything, it is how self-absorbed the venture capitalist community really is.

Confessions of a Venture Capitalist has little substance but many frivolous trimmings. The most intriguing subject matters, notably VC decision-making processes and valuation methods, receive only cursory treatment. The bulk of her 'lessons' for entrepreneurs are as instructive as the following nugget "when you make a decision, stick with it".

More cynical readers will, therefore, relish the fact that Quindlen also makes some rather foolish statements in her book, repeating examples of once "radical" business principles, inspired by the nascent Internet industry, which have since been called into question and now look very dated. Today, few analysts would agree with the maxim, "on the web...market share - not profitability - is often the key to success." Indeed, the lack of original ideas in the book is difficult to reconcile with Quindlen's insistence that she is a visionary: she claims to have spotted the potential of the Internet when she began using email in 1987.


Know what you want before you buy   February 23, 2001
4 out of 5 found this review helpful

Confessions' describes the many ways that you can destroy a start-up business, and by implication how to avoid them. If you are looking to invest in one the advice is invaluable. If you are involved in running one, likewise.

None of this stuff is new, but it is well written, well supported with examples and very relevant to the want-to-be or currently-am start up. If you like the expression "only a fool learns from his mistakes, I profit from other people's" this is a book for you.

On the other hand, if you want an insite into the ways that VC companies work, try Done Deals, you'll get the numbers and USA VC background. Want to know the entrepreneurs viewpoint? Try The Internet Entrepreneurs. Finally, if you want to understand how the business operates, particularly in Europe, you can not do better than Michael Hay's "The Venture Capital Handbook".

In closing, if you are looking for a VC kiss-and-tell tabloid story, Confessions' will disappoint. Buy it for the basic common sense well meaning insights into how to run a high growth company and you will not be disappointed.


Vague and un-insightful   February 16, 2001
3 out of 3 found this review helpful

With a title like "Confessions of a VC- Inside the high stakes world of VC financing", I expected a very personal book packed full of juicy anecdotes illustrating the life of a venture capitalist- what happens behind closed doors at partner's meetings, how they decide which companies to invest in, the hardships of working with entrepreneurs, a few examples of hard decisions like having to fire the founders etc...Well there are real life stories and several internet household names. And readers looking for gossip on Sand Hill could find it amusing. But there is not enough on what goes on inside a VC firm. Maybe my expectations were skewed. So what does the overview say?

The overview claims that the book aims to educate entrepreneurs on the pitfalls and opportunities available in the VC world. If that is really the author's goal, then I'm afraid she is far off the mark.The insights are few and very superficial. For thorough guidelines for entrepreneurs, there are much better references out there, such as Nesheim's High Tech Start-Up. In conclusion, I was disappointed by the lack of substance, and felt mislead by the title and the overview.