It’s hard for Silicon Valley investors to not coddle a young, hotshot CEO.
Being too mean draws a bad reputation among entrepreneurs and could lead the investor to not see the next great deal. And focusing on older, less-spry founders might cause a venture capitalist to lose touch with today’s consumers, customers and products, and totally whiff on a wave of innovation.
Khosla Ventures has hired Dan Levin, the longtime No. 2 at Box, to run against those headwinds. Levin helped grow the cloud-storage company from 50 employees to 1,800 by the time he left last year, and he still sits on its board.
Recode chatted with Levin for his first interview as an operating partner at Khosla. The newly minted venture capitalist is critical of Silicon Valley for failing to support and challenge CEOs who don’t have much life experience but do have huge checkbooks, thanks to VCs.
It raises an interesting question: Are tech CEOs too young to be handed this long a leash?
Here’s our conversation, edited for length and clarity:
Dan Levin: A lot of venture capitalists are not operators. They have not been executives at the large organizations. They are finance guys, and they’re very smart finance guys. They’re not in a position to teach a CEO how to hire a great leadership team or how to have a hard conversation or how to motivate a bunch of people.
They’re very well positioned to teach a CEO how to manage their board of directors, how to deal with a fundraising strategy. But the realities of — for example, creating a very positive, healthy culture in a company and thus avoiding all these horrible things that have been coming out about sexism and racism and gender bias — that’s a skill: How to create and manage a fabulous, inclusive, diverse culture. And that is not something your typical venture capitalist is in a position to teach a CEO how to do.
Recode: Just in general, how critical are you of the VC industry? You were saying there’s a lot of NBA player/investment banker hybrids. You were saying that you feel like the VC community has kind of failed to support younger CEOs. How much blame do you lay on, not on anyone specifically, but on broadly the advisory set of investors?
I don’t think “blame” is the right word. Venture capital firms were not designed to teach. They were not designed to help entrepreneurs beyond a fairly narrow set of skills. They’re designed to make investments, to provide capital. And by doing so, to enable innovation.
Firms like Khosla — and there are one or two or three others — have chosen to focus not only on venture investing but also on venture assistance.
You were just saying before that you feel like the Valley failed our younger CEOs. But you’re not saying it’s specifically VCs. You’re saying it’s the Valley overall.
Yeah, that’s right. I mean, there’s been a very fundamental shift in the types of people who are running many of today’s startups. I’m not pointing a finger at the venture capital community. I’m saying the Valley as a whole has struggled to adapt to that new reality. For example, you see an awful lot more CEO coaches than you ever used to.
The job of a VC is kind of a hybrid between investing dollars and then doing the support function, right? Which is serving on a board, being a sounding board for CEOs. Do you think the coupling of those two jobs, which admittedly are pretty different — one is kind of a financial decision, not dissimilar from an investment banker, and the other is kind of a CEO coach — do you think that makes sense, as an industry?
Not that you can change that overnight. But when you just take a step back and think about the job of a VC, do you think that it makes sense for those two things to sort of be under the same job description?
No, I don’t think it makes a lot of sense for the same person to try to do all those things, and I think that’s a big part of the reason that Khosla has chosen to separate the investing team from the group of operating partners whose job it is to support and enable and teach these entrepreneurs how to be most effective.
It sounded like you were somewhat critical that the VC industry may have gotten too founder-friendly. Obviously, part of that is competitive advantage. Do you worry about that? Just that as part of the effort to see deals, win deals, burnish their brand, that the industry has gotten too accommodating toward CEOs and sometimes doesn’t deliver the tough love that they need?
I think that many investors, in the pursuit of a brand that will enable them to see as many deals as possible, choose not to be as frank or as open as they could be with the CEOs that they work with and the entrepreneurs that they work with. And I personally don’t agree with that as an approach, and Vinod [Khosla] has been quite vocal in his disagreement with that as an approach, as well. It’s very hard to sort of square the circle of, “I wanna be nice and I want to be popular,” with, “I’m gonna help with as much as I can.” Because helping requires candor.
Can you talk about just how you have seen the profile of founders change over time? You feel like, in general, you’re just seeing a lot of younger CEOs? Good ideas from people who are 22, 23? Are you noticing a lot more of that than you were at the beginning of your time in the Valley?
I do see a real change. I think that’s driven by a number of factors, one of which is the relative ease of creating especially consumer-facing, web-delivered applications and mobile applications. You’re seeing much younger and much less experienced and much less well-trained individuals showing up as entrepreneurs and getting funded by top-tier firms.
You know, Sequoia used to be very well known for replacing entrepreneurs with professional CEOs. That was their brand for years and years. And they’re not doing that anymore. And they’re not doing it because they know that if they did do it, they won’t see the deals that they need to see to be successful.
This article originally appeared on Recode.net.