Today seems to be the day to dump on venture capitalists. I just got done describing the irony of Guy Kawasaki's approach to investing when C/NET posted a real gem from David Strohm, a general partner at Greylock. David indicated that "In the vast majority of companies I look at today, the leaders are Israelis, Indians, Chinese, Finns, Danes. They aren't coming out of the American culture".
He goes on to suggest that the main reason for this is that many U.S. college students are going to work for Wall Street and hedge funds where they service somebody else's legacy rather than creating their own. Yea, that's right, millions upon millions of good old fashioned traditional American kids are working for hedge funds. I don't think so. David needs to spend some quality time in Milwaukee, Lansing, Des Moines and Tuscon.
The reason why the vast majority of companies David looks at today have leaders who are Israelis, Indians, Chinese, Finns, and Danes is because David and his VC brethren collectively believe that they make better managers. This little piece of VC conventional wisdom has been in place since the 80's, and continues to advocate that traditional American entrepreneurs are not smart enough to compete. The traditional American entrepreneur, with three years of college from Iowa State, running a startup in Ames, will never get to first base with a top tier VC. Not because they can't compete, not because they aren't good enough, but because VC's have established a self-fulfilling prophecy that they cannot succeed. Therefor no investment.
What David doesn't get, is that these traditional American kids have rattling around inside of them the genes from parents and grandparents who fought the wars, started the companies, built the institutions, took the risks, enjoyed the fruits and suffered the failures that today allow Chinese, Indians, Israelis, Finns and Danes access to our educational system and capitalist infrastructure. And if David and his top tier counterparts would decamp in Memphis or Charleston or Atlanta or Dallas and start investing in an "American vibe" I have no doubt in a few years that they will see startling returns.
All you have to do is Take a look at the nationalities of the Greylock team and the location of their offices and then you'll begin to understand why they don't fund Americans. (SIDEBAR:: A while back I penned The Guru Red Manifesto a collection of 52 practical truths I have assembled over a twenty-five-year career as an American entrepreneur. Little nuggets of wisdom I've picked-up from competing on the front lines of entrepreneurship that speak to many of these issues. You can grab a free PDF of The Guru Red Manifesto over at the ChangeThis web site. Guru Red was in one of the first batches they published back in 2004 and for some odd reason, despite it's political incorrectness has consistently stayed in their top ten business manifestos. Go figure).
Greylocks approach is reminescent of comments made by Carly Fiorina who after getting ousted from HP joined the board of Taiwan Semiconductor Manufacturing Co. as an independent board member. I'm not sure why, but this on top of her infamous proclamation that "American's do not have a God-given right to jobs" just doesn't sit right with me.
Do I think that Americans have a God-given right to jobs? Of course not. But I do think that good American folks like Carly and David have an obligation to focus 100% of their time and efforts on increasing America's competitiveness. Not Taiwan's and not China's. Yea I know it's a quaint, naive, protectionist viewpoint for some, but for me it's a core value that I can't shake.
And as reported in the Wall Street Journal a while back, Stanford awarded 88 Ph.D.s in electrical engineering last year. 49 of these went to foreign-born students. I'll bet the majority of the foreign-born students returned to their home countries in order to increase the competitiveness of their home countries. For which I commend them. Stanford on the other hand...
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