Two brains. One VC.

Brain slug partyWhen people ask me why I like my job, my answer usually contains one of these three reasons:

  1. I love technology and imagining how it will shape the future.
  2. I love working with entrepreneurs.
  3. I love doing lots of different things simultaneously.

Lately, I’ve been having trouble with #3. It supports the time I spend quickly evaluating hundreds of companies each year, but it undermines another crucial aspect of a VC’s job: performing deep due diligence on a select few of these. In fact, when I switch between “sourcing” and “diligence” modes, I often feel like I’m using two different brains — one that’s good at frenetic pattern matching, and another that’s good at pursuing hypothesis-driven investigation.

Running both brains simultaneously is difficult. They interfere with each other. The multitasking I so often enjoy (hence #3) can be downright annoying when I’m trying to build a complicated financial model, or construct a thorough competitive analysis. To the contrary, I find these otherwise monotonous tasks strangely relaxing and satisfying when I’m in diligence mode. It all depends on which brain I’m engaging at the time.

I suspect founders face this dichotomy as well, especially early on before roles are formally assigned to mid-level executives. Please leave your comments below, and answer the question, “Are founders dual-brained creatures, as well?”

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7 Responses to Two brains. One VC.

  1. The two brains definitely exist. I often fluctuate between then as I get burned out on the other. If I spend all day in sourcing/multitask mode, I get itchy and feel unproductive because I’m not “creating” anything. Likewise if I spend longer than a week narrowly focused on one project (Deep DD, a model, or code), then I have to strain to continue to focus on just that one narrow topic.

    Each brain is the solution to the other. Hopefully the work in front of you lines up with those needs.

  2. It sounds to me as though the VC plays both the roles of an analyst (diligence) as well as an executive (sourcing). Wouldn’t it be better for the VC to allocate more time to sourcing new deals, and direct the diligence to a marketing/finance/law analyst? This method should allow for more in-depth research on both sides all while creating a productive bliss for the VC.

  3. Great post — I definitely agree as a VC and as a former entrepreneur. This reminds me of Paul Graham’s post on “Maker vs. Manager Schedule” —

    • Alex Taussig says:

      It never fails that when I think I came up with something smart or novel, someone else said it before. Paul Graham is like the VC version of the South Park meme: “Simpsons did it!”

  4. bvpcambridge says:

    The post resonates; I would also add in a ‘3rd brain’ of a consultant, as we work with our portfolio companies.

    One of the practical challenges I find (in addition to the constant balancing between the two brains) is that our short-term pre-existing schedules may be relatively fixed (I find VC schedules to generally be booked out 2-4 weeks). Creating the time to do really strong diligence may some schedule shuffling (which could take away from the ‘sourcing brain’) and lead to many a late night/weekend in order to not lose time on closing a deal.

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