Sunday’s unordered thoughts on context, incentives, intellectual honesty and the changing venture capital industry:

• Malcolm Gladwell, Geek Pop Star (New York Magazine):

  People are experience rich and theory poor. My role has been to give people ways of organizing experience.

  Gladwell has become more popular than the scientists that create the fundamental ideas that Gladwell understands and translates to a broader audience. Need more proof that context matters?

• Michael Lewis on Portfolio.com: The End of Wall Street’s Boom:
  

  I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hope that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

  Somehow that message failed to come across. … I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

  When John Gutfreund and the partners of Salomon Brothers converted Salomon Brothers from a private partnership into Wall Street’s first public corporation,

  … they transferred the ultimate financial risk from themselves to their shareholders.

  The moment Salomon Brothers demonstrated the potential gains to be had by the investment bank as a public corporation, the psychological foundations of Wall Street shifted from trust to blind faith.

  Need more proof that incentives matter?

• Mike Speiser at Laserlike:
  

  I believe that the biggest advantage a startup has over a big competitor is intellectual honesty. Most of the entrepreneurs I know start their own companies or join startups in order to do what they wanted to do at their larger [previous] employers — to do something worthwhile. Then they finally reach the conclusion that the only way to avoid cargo cult management is to start from the ground up. This is particularly true of technical professionals who view intellectual honesty as core to their job. How often to you hear business people poke holes in their own arguments the way engineers do?

• Fred Wilson: A Slightly Different Perspective:

  The venture capital business is changing if you look closely. Many of the biggest and best firms are slowly but surely turning their attention from information technology to energy technology (ET). Not all of them will be good ET investors and the firms that don’t navigate that transition well will struggle. Firms that continue to focus on IT have largely turned their attention to the web where capital requirements are lower and technology and IP barriers are non-existent. Many firms are struggling with these realities and they may decide to throw in the towel on IT.

  … the reality that money is harder to come by and may stay that way for years will likely force the venture industry to get smaller not bigger.

  But be careful what you wish for. We will get a better, more efficient venture capital industry that produces better returns for investors from all these changes. But we may also get less capital for entrepreneurs. Just like there aren’t thousands of great VCs, there aren’t thousands of great venture capital investment opportunities. When the industry is flush with cash, entrepreneurs are the beneficiary. When it is not flush with cash, entrepreneurs will feel it too.

  My comment:

  The interesting thing is that there are a lot of different reasons being proposed and promoted about “why VC is broken”. As usual, some are misguided, incorrect or just wrong: but some offer a chance for some reflection as to ways VC could change or grow.

  VC evolved to solve a need: why should that need always exist in the same way forever?

  I think most of the people claiming “VC is broken” are entrepreneurs looking for capital…

  To be clear, I don’t think “VC is broken”. But I think there is an opportunity to adapt to better address a new economic reality.