Tying the knot: why 99% of VCs shouldn't build software
If they ask “How long does it take?” the answer is “No.” Over the last couple of years, I’ve had dozens of conversations with people working at VCs about whether they should build some sort of platform software. You would never divorce your current spouse to marry a new partner only to ask “So, um, how long are we in this thing for?”
First, let’s start with that question. “How long does it take?” The marriage metaphor is apt because the good ones are until death do you part. The organization will grow and evolve therefore your software will need to continuously evolve. Building software means building not just for who you are today, but for who you will be in five or ten years from now. If that’s too scary — that’s fine! There are other arrangements available (like buying). That mindset will save you countless hours and a whole lot of money.
And precisely because building software requires commitment, it means changing who you are. Like, literally. The org chart must change. Too often I’ve seen people who are part Product Manager, part Community Builder, part Ops, part [insert whatever job needs to get done]. (That description described me for some years, I might add!) That works to get something out the door, but not something useful. If, as is the case for much software, the initial assumptions are somewhere between 50-100% wrong, someone will need to have the time to investigate not only which assumptions were wrong, but why they were wrong. And that takes time. And that takes focus. Never mind all of the actual expertise that accompanies being a Product Manager; it’s an entire profession for a reason!
Finally, it means changing what you do, including the little things. Especially the little things. Software relies on data, duh. If you’re not going to hire a team of engineers to devise all sorts of super fancy ways to ingest data, then that means someone has to enter the data to power the platform. Who is that someone? If it’s the Partners, because they’re the ones sitting in on the meetings or who have the network, will they be that someone? If an entrepreneur asks for help, will your team do the homework or point them to the platform? These VC equivalent to leaving the toilet seat down or making the bed, and that’s precisely the point. New behaviors will need to become habits otherwise the magic is gone.
Now if you asked my company six years ago, “Are you willing to make a permanent change to who you are and what you do”, I suspect the answer would’ve been no. But here we are. Six years later and sixty years wiser (at least I’d like to think). So it’s definitely possible. But like any commitment, better to go in with your eyes wide open.
PS - there’s one more big reason why not to build. In fact, it’s so big and so blindingly obvious that people — myself very much included — miss it. But that requires another post. More coming soon.