College Presidents and Venture Capitalists – Twins?

Venture capitalists and college presidents are groups that, at first blush, have nothing in common. The VCs are all about deals, money, and entrepreneurs, and college presidents might say they are all about student development and making the world a better place through teaching, research, and service. (Although the uninitiated believe the job is about feasting on the fruits of knowledge and drinking from the fountain of wisdom while raising money from rich alumni.) The two roles might have more in common than you think…(College Presidents and Venture Capitalists)

Connecting College Presidents and Venture Capitalists

As a member of the small fraternity with tenure in both roles, I am here to report similarities. There aren’t very many members in each group. And depending on the day, both can be seen as equally unpopular.

Descriptions of venture capitalists can include comparisons to animals and body parts. Description of college presidents are only slightly more favorable and may include the words “out of touch,” wimpy leftists, or lousy leaders.

Of course, there are positive descriptors for both too. People describe VCs as those who see and invest in the future. College presidents shape the leaders and citizens of the future. Both can sit on a lofty perch that can wield real influence.

There are more substantive ways in which VCs and college presidents share a similar perspective on life. These two seemingly disparate professions are both critical to the future, and not only do they have traits in common when they work together, but good things also happen.

Take the embracing of the virtual world. The concept began with academics and was quickly embraced and expanded upon by venture capitalists resulting in new companies and online experiences worldwide. 

Similarities Between College Presidents and VCs

For the benefit of innovation and education, let’s acknowledge the similarities between VCs and college presidents. Here are just a few: 

Planning

1. Rely on “pattern recognition” in considering possibilities. Does the entrepreneur show something that signals future success? Did the basketball coach have an overall winning record before? When making decisions about the future, the data is often incomplete. As both VCs and presidents may comment, “It has never been done before.”  Both must rely on instincts and judgment to create the future, sometimes against the grain.
2. Must follow investments closely. The model is not to spend some money and hopes it works; it is to allocate resources and ensure something good comes out the other end. The “end” may be five or ten years in the future, and the need to follow never ends.
3. Need ideas. The more, the better. It’s better to consider ten ideas in the hopes that one might be worth the investment, whether it’s a new technology or a new academic program. When the deal flow or the demands on a college budget dry up, it’s a warning sign that the ideas aren’t coming.
4. Require a wealth of information. Investment considerations can run from autism analysis to video games, and academic decisions can run from athletics to zoology. Renaissance-type people are required.   It’s not a matter of SAT scores. It’s a matter of intellectual curiosity.
5. Can see the future. The VC sees through entrepreneurs and technologies, and the college president sees the future through the students and institutional research. Both need to view the future world with optimism.

Execution

1. Have to show a return on investment. The capital required to be successful in both roles is immense. An ROI must be shown for the fund or the college to survive. Both pay a lot of attention to this metric. A lack of an ROI could be a career-shortening event.
2. They can benefit disproportionately from a big win. Win an NCAA title, and the entire institution will benefit in fundraising, enrollment, and branding. See Duke or Gonzaga. Make a tremendous investment, and you have the Midas Touch, and the fund’s reputation is set forever. See Google or Twitter and Sequoia and Accel Partners.
3. Have many constituents to please. For the VC, the list includes investors, partners, entrepreneurs, other investors, and the entire tech world. For presidents, the list includes alumni, faculty, students, and residents. Oh, and then there is the family.
4. Make decisions that don’t make sense. A VC might invest in cold fusion, a never proven technology. A college president may build a new sports center amid budget cuts. Only time will tell if the decision makes sense.
5. Rely on the success of teams. Any VC will report that the entrepreneurial team is more important than the technology. Any college president will say that without a great team, success will be elusive. Creating teams is the critical part of each job.

Resource Allocation

1. Both have limited resources to spread around. Even the big venture funds are not limitless, and monies must be set aside for future investments. No college president has enough money to keep everyone happy. At a time of creating big funds and increasing tuition, both need to overcome the perception of having unlimited resources at hand.
2. Both must rely on funding sources. Both are always raising money. The well of money always needs to be refreshed in the venture world or higher education. Effective leaders in both are always raising money.

What Comparison Can Teach Us

Good leadership requires so many special traits. Key among them is a unique blend of judgment, risk-taking, and keeping lots of people happy. VCs and college presidents are related like twins of different mothers in these unique traits. Both groups are trying to make the world a little better.

Further Reading on College Presidents and VCs

• Read more on K-20 Leadership here.  
• Read more on College Presidents and leadership here.