In recent years, almost everything but venture capital has garnered Tom Perkins attention: the marriage to romance novelist Danielle Steel; the memoir afterward; Perkins’ role in having Carly Fiorina sacked as HP’s CEO and later elbowing the company’s chairman, Patricia Dunn, out the door. And of course, there’s the media’s fascination with Perkins’ lifestyle: from his estates to his yachts to his car collections.
Yet every once in a while, Perkins — who cofounded today’s Kleiner Perkins Caufield & Byers with Eugene Kleiner 38 years ago — gets so pissed about something relating to VC that he steps back into the limelight to say so. Today, that issue is the carried interest legislation in President Obama’s 2011 budget proposal.
Why today? I’m not sure. The country seems fairly focused on the President’s bipartisan health session today, along with why Greece is on the brink of financial ruin. More, not even National Venture Capital Association president Mark Heesen thinks the carried interest issue is going to be a problem again until the economy recovers, and that then, Democrats might be too skittish to touch it.
Still, when Perkins takes the time to speaks he does in an Op-Ed piece in today’s Wall Street Journal, it makes some sense to listen. Certainly, the column, which seems patronizing by design, will be a big hit with nervous VCs who wish Washington would just leave them alone already.
Too often, there is confusion between investment banking and venture capital. This isn’t helped by investment bankers’ occasional assertions that they too do venture capital. They don’t. In light of the attention both of these activities have lately received in Washington, it seems a perfect time to explain what makes them so very different.
Venture capitalists work with entrepreneurs to start new companies from the ground up. We earn our reward only when companies become successful.
Investment bankers are deal makers. They’re in charge of bringing companies public and advising on acquisitions. Their money is earned by the transaction, and in the fraction of the time it takes a venture capitalist to realize a profit.
For the rest of his piece, click here. (Subscription required.)