Sunday, July 30, 2006

Golfing and Venture Capital: Not So Different!

This weekend, my girlfriend, Amy, gave me a new driver for my birthday! Yeah, I know... Nice girlfriend!

I purchased a set of TaylorMade rac OS2 irons last year and have been playing pretty much exclusively with the irons since. Playing with just irons has its advantages in terms of accuracy, but on the big courses, it's nice to get that extra 25-100 yards off the tee. OK, OK. But what does this have to do with Venture Capital? Stay with me...

So, I settled on a TaylorMade R7 Quad driver. With Saturday coming to a close, we race over to a nice executive course, Deep Cliff Golf Course in Cupertino, CA. We tee off late at 5:30pm. The first hole is a short Par 4, dog-leg right, playing 271 yards from the Blue tees. I pull out the new driver with great anticipation.

Blue Tees2711361281641652241181062541566
White Tees24212111714615016095882321351
Yellow Tees2001059011011214748631731048

A swing and a shank. Hey, it's a new club and we're not playing for money. That's a mulligan. I tee up another ball. Visualize... A swing and connection. The ball flies long, fades beautifully along the dog-leg, and appears to have rolled up onto the green! When we arrive at the green, the ball is sitting pin-high about 20 feet from the hole. Two-put for a birdie. I'm thinking that I like my new club! This could be the start of a beautiful and prosperous relationship. Let's do it again! I love golf.

You golfers out there know where this is going.

The rest of my round was OK overall. The new driver gave me one more beautiful shot on the back nine, but there's much work to be done. Most of my other shots gave me so-so returns (1x-3x my money) and a quite a few were complete disappointments (0x-1x my money). There were moments when I wondered why I even play this damn game. I hate golf.

Then, I remember the beautiful fade on the 271-yard drive that gave me an opportunity for Eagle. That one returned 15x my money. It takes just one of those on every 9 holes that I play to keep me coming back for more, to keep me pulling through the utter disappointment shots. Golf is a hits game, not unlike Venture Capital.

The analogy ends here. Venture Capital allows for way more utter disappointment shots than golf would ever tolerate. There are penalty strokes in VC, delivered by unhappy Limited Partners. But, delivering a shot that makes the highlight reel and changes the world makes it all worthwhile. I think I'll play another round.


PS: Golf is really not a hits game. This weekend at the U.S. Bank Championship, Corey Pavin showed us what it's like to play a perfectly consistent and accurate game without hitting the long ball. Brilliant. There are VC's that play a consistent and accurate game as well, getting so-so returns (1x-3x my money) on many portfolio companies. There's nothing wrong with having a more consistent VC game - the LP's just want a great return on their money. Unfortunately, when we think of the game of golf, we remember Tiger Woods and his 390-yard drives, not Corey Pavin and his perfectly executed tourney play. Same's true in the VC world.

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