72 virgins. We all know who gets them. No, I’m not talking about Al Queda or the Taliban. I’m looking closer to home, right here in our VC backyard.
One the industry’s most venerable VC firms yanks the megaphone from the hands of the New York Times and the Wall Street Journal to pronounce its own craft “damaged.”
“The VC Model is Broken” screamed several mainstream headlines in October as GPs and LPs rushed to pick up the pieces left by the incendiary suicide bomb. The martyr tape continued: “There is no way to make money in this business. So we have decided to end it here and now. Good luck to all. We’ll come back to you in the glorious future with some new ideas. After we go to heaven. After we meet the virgins!”
I’m hoping there are lots of virgins out there for guys who want to end it all. Meanwhile, there are lots of VCs out there doing just fine, thank you, on the basis of the hundreds of exits we’ve seen since 2002. And we’re not talking $1 exits as one of the martyr tapes suggested (btw, I would expect martyr YouTube videos by now. They are free and only take a bit more savvy than calling the New York Times.)
Here is the rub. The martyr tape might work elsewhere but it has never worked in American Business. Sure, companies exit businesses (see IBM ThinkPads) — but they don’t shut themselves down entirely. They don’t just say “our margins are going down and we will just shut down.”
But that’s precisely what is happening in the VC industry today. Instead of reinvention there is retirement. And instead of retirement, there is suicide bombing. “If we can’t do it nobody else can!” Kaboom.
Next time: Why minicomputers from the 80s don’t sell anymore. And what you can do about it without calling it quits.