Five Years Too Late

January 11, 2010

VC Expiration Date

Filed under: Uncategorized — fiveyearstoolate @ 12:26 pm

Stuart Ellman

Lately I have been thinking a lot about my age. I’m 43 years old and I have been in venture capital at RRE since I co-founded it in 1994 when I was still 27. At 27 I was always the youngest VC partner in the room. To say that the information technology business and the venture capital business have changed in this time period would be an understatement. Since I began, the industry has experienced the greatest bubble in its history and the greatest crash. The number of venture capitalists has tripled and then halved with perhaps more to come. These days I’m often the oldest person in the room. Two of my portfolio company CEO’s were pre-teens when I started at RRE.

What really got me thinking about age was something I experienced on vacation in Anguilla with my family. I met a restaurant owner who had spent his high school years in NYC. I asked how old he was, assuming he was in his mid 30’s. He told me he was 55. I was blown away. I told him how young he looked compared to me. He said, with all obviousness, that of course that would be true. He lives in a tropical paradise while I live in NYC and work in venture capital. It really got me wondering how long I can stay current in venture capital.

There are certainly venture capitalists who are older than myself but still current and active. My partner, Jim Robinson III and his contemporary, Alan Patricof, are testaments to vibrancy and enthusiasm past the age of 65. Fred Wilson, my friend who I consider one of the best VCs, has five years on me. But here are a few reasons that I wonder when I will be out of date.

  1. Age of startup entrepreneurs. I look at my work with my entrepreneurs in a very specific way. They are usually friends, either before I invest or through our work together. They are people who I can relate to. They are people that I respect. And they are people that I trust. For a guy like Martin Tobias, CEO of Kashless.org, or Gary Steele, CEO of Proofpoint, that is very easy. They are people that are about my age that I have grown up with in the industry. For a person like Sam Lessin, CEO of Drop.io, who is 26, it is a little harder. I trust Sam but it is helped by the fact that I have known him since he was 12. There has to be a huge amount of trust. I cannot help but wonder if this will continue to get harder as I get older but the entrepreneurs remain in their 20’s and 30’s.
  2. Age of business development relationships. Part of this industry is being able to do deals with Google, Cisco, Yahoo, Oracle, etc. It is being part of the ecosystem of people that you can call to do the deals for your portfolio companies. Most of the people in these roles are a few years out of business school. My friends had these jobs. They have moved on to bigger and better things. For example, my college friend, Jonathan Schwartz was just CEO of Sun. My former peer in the venture community, Brad Garlinghouse, is now President of AOL. But the guy I need to cut a deal with at Cisco. They change and remain about the same age as I get older. The ecosystem changes and I no longer have as many of my peers doing these jobs.
  3. Time commitment to be really involved in the NYC tech community. The NYC tech community is really vibrant. There is a ton of startup activity going on. Between the various tech meetups, Betaworks brown bags, the hatchery, startup alpha, entrepreneurs roundtable, and various conferences there is something going on every night. To be in the flow of everything going on, I would need to be in Manhattan and Brooklyn every night, drinking beer and eating tapas. But that gets a lot harder when you have little kids. People in their 40’s are married and have children. Do you ever want to see your kids? Do you want to watch them play sports or go to a dance recital? It just gets a lot harder to be as involved.
  4. Willingness to continuously reinvent. I and everybody who stays on top of their game in technology needs to continuously reinvent themselves. I have, at various times, been very up to speed on enterprise software, B to B exchanges, B to C commerce, e-commerce, payment systems, clean tech, consumer green tech, mobile hardware, mobile software, consulting, wireless safety, Location Based Services, Wifi, Zigbee, RFID, and everything else that has been relevant in the past 15 years. The only constant is that, what I need to be focused on will change about every year. This gets harder as a person gets older. People in their 40’s are supposed to use wisdom to make up for the lack of time or aggressiveness. But that doesn’t work as well when everything keeps changing.
  5. Willingness to stay cutting edge. Do you want to really know what is going on in technology? Then you have to constantly be on the bleeding edge. You had to get rid of your Blackberry the day that the iPhone came out. Why, because it was the future. But the future, back then, worked terribly with Microsoft exchange and many of the apps worked poorly with the available bandwidth. OK, now you have your iPhone 3gs humming. Now you have to get the Nexus One. Why, because you need to see what is going to happen there. But, I guarantee, there will be early adopter or 1.0 problems. Yet you need to go through the pain of doing it. Wouldn’t it be easier to keep the iPhone rather than spend 40 hours this week to get the Nexus working. Sure, but you will not see the second level consequences of the shift to the Nexus. That amount of time and annoyances are much harder the older a person gets. My partner, Jim Robinson IV, always spends the time and keeps way ahead of the curve. I believe he is both a genius and a saint for doing this.

In my heart, I know what the right answer is. I still love this business and am willing to sacrifice much to be very good at it. I have much wisdom about starting and growing companies that I use to help younger entrepreneurs. I will not neglect my family but will continue to find a balance between a very demanding job and being an involved father and husband. I need to make sure that my firm, RRE, has people that are younger and will go to every event that I cannot make. We need to see every interesting deal in NYC and make sure we choose the best ones. So, do not put a fork in me yet. I have at least another 10 years to go. But, we all know somebody in every industry that everyone else knows should have left a few years ago. I will not be that guy. Let’s discuss when I am 53.

About these ads

12 Comments »

  1. thanks for sharing your introspection — interesting. Do you really feel a problem with business development, however? If you’ve got relationships at the top, you can always get to the person you need, and by coming from the top, you tend to get better attention and urgency. It can be a lot harder to push the other way around.

    Comment by Giff — January 11, 2010 @ 1:22 pm

  2. Stuart, I’m also 43 and I love this blog – but this is a crazy post! Stop when you no longer enjoy learning, and not before.

    43! Pfft, tell that to Ron Conway…

    Comment by David Semeria — January 11, 2010 @ 2:30 pm

  3. Great post. Life balance. The kids grow up fast. See you tomorrow.

    Comment by Richard Bauer — January 11, 2010 @ 3:37 pm

  4. [...] Reflecting on 16 years in the venture capital game, RRE Ventures‘ Stuart Ellman explained why he put money into young Lessin’s file-sharing service: He’s known the guy since he was in like the 6th grade, you see: [...]

    Pingback by Born Rich: How to Launch a Startup without Really Trying | TechBlogs Today — January 12, 2010 @ 8:41 pm

  5. Hi Stuart,

    I think what you’re referring to is pretty common to a lot of businesses.
    With age (should) comes a larger support network, stronger bonds with people.
    With age and experience comes the ability and wisdom to screen archetypes faster, figuring out people you can rely upon to fill the gaps you mentioned.

    I find that it’s not just an age or “being a parent” thing. It happens with any phases that require your individual focus.
    Either way, these are times when you need to outsource the “being-in-the-move” skill-sets to people who are hungry for it.
    You can either hire a team of EIR/Charlie O/Nate W/Jon S-alike for the community nurturing/cutting-edge aspect, and/or spend a couple of hours monitoring the web after everyone is asleep (unless you’re trying to avoid wrinkles ;)).
    As far as the deal-making side of things, US still being a transactional-based market – you’ll always be 2 or 3 LinkedIn degrees away from those Fortune 500 decision makers. If you’re looking to talk to a chinese or european buyer, then yes it’s all about guanxi (i.e. relationships) which requires only 2 things: an expert intermediary who already has the relationships + a lot of patience (and of course an open mind). So you see, nothing to worry about ;). We’re just talking about organic growth here.

    Either way, mentoring and fostering the next generation of you(s) is definitely something to think about.
    And just like deal flows, it may take a few eggs before you figure out which of these will make the best omelet…

    Good luck and thanks for the honest post.

    Comment by Sandira — January 13, 2010 @ 5:35 am

  6. Looks like you finally hit your mid-life crisis. I hit it a couple years ago when I was 39. Perhaps it’s time for you to start another company.

    Comment by William — January 13, 2010 @ 2:26 pm

  7. Not really a mid life crisis, just greater self awareness of what it takes to stay current. I got my red porsche convertible in 2001. That seems like a pretty sure signpost of the mid life crisis back then.

    Comment by Stuart Ellman — January 13, 2010 @ 3:18 pm

  8. I’m 38 and on the verge of entering the VC industry. And I can’t wait.

    Comment by Michael D — January 14, 2010 @ 9:28 am

  9. Impressive. You’ve given me something to think about, related to my industry. Thanks for the insightful post.

    Comment by Matches Malone — January 14, 2010 @ 10:42 pm

  10. Stuart- Thanks for sharing, very interesting post as I imagine most VCs would avoid asking themselves this question. Also reminded me the importance of staying plugged in and going to events in the NYC tech community. It is time-consuming, but I always get to learn new things/meet new companies I otherwise would not have learned/met.

    Comment by Melody Koh — January 31, 2010 @ 9:01 pm

  11. On vaikea löytää valistuneita people tästä aihe , et kuitenkaan kuulostamaan tiedät mitä puhut! Kiitos

    Comment by Nettisivut — August 28, 2012 @ 6:11 pm

  12. Spot on with this write-up, I really feel this site needs far more attention. I’ll probably be returning to read more, thanks for the advice!

    Comment by Read only best site, like yours. — September 4, 2012 @ 1:24 am


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

The Shocking Blue Green Theme. Create a free website or blog at WordPress.com.

Follow

Get every new post delivered to your Inbox.

%d bloggers like this: