Episode 225 - Marks on the Market: Celebrating America 250 & Entrepreneurial Spirit in the AI Era | Donna Harris

Well, I would say, I'm not sure I would say I have a skeptical take.

I think it's a really solid tool for a specific use case.

I think the challenge is that we've misapplied it.

And I think that's where a lot of that skepticism comes in.

I mean, the numbers kind of tell the story only one in about 10,000 startups ever sees a dollar of venture capital.

And we often forget that.

So when you travel around the country and you go from city to city and ecosystems, you see pitch competitions, you hear about programs that are teaching founders to raise money, and those are good things, but they're not really targeting the other 9,999. entrepreneurs who, by the way, aren't lesser entrepreneurs.

They're just building something that doesn't fit a particular mold.

So I think it has been a very valuable tool for funding world changing companies for sure.

But we often just misunderstand it.

I also don't think people realize how much venture capital invests in companies that are already getting traction.

Not necessarily that like cowboy with an idea stage company, right? Increasingly, venture capital is coming in once some of that risk has been proven out.

You've got traction.

You've already got product market fit.

So it's really... more of a financing scale tool increasingly today than it is a financing that early stage experimentation.

And I do think just critically, one area where I am skeptical is how much the vehicle is kind of leaned towards extraction.

I think there's a lot that is sort of when you have a mandate to maximize your return, the default behavior becomes growth at all cost.

And if you aren't proactively pushing against the default, then that can create some unintended negative consequences that we do see and you do hear about when people are posting some of their negative views about venture capital.

But my sense is it's a good tool and it's one tool of many in the toolbox.

We don't need a hammer for every single job at hand.

Your comments, Donna, make me actually think of, there's a great article written maybe six or seven years ago on, hey, venture capital is a little bit like jet fuel.

And if you're trying to build a jet, it's a great thing to have and you're gonna need it.

But a lot of people are building other things that are not as conducive to the type of outcomes that venture capital is looking to have to be able to make their model work.

And so, I think it's actually, And I feel like there's maybe more sobriety now than there was five or 10 years ago, where it was this sort of Pandora's box of excitement and opportunity in venture capital.

And now people are becoming more accustomed to this idea that, hey, not every company really should be raising venture capital because the outcomes that are pushed for by those investors are very much driven by power law dynamics, which is just more, more, more risk.