It's also ironic that many failed start-up founders end up on the investment side, I'd love to see more successful people in charge of who gets funded and who does not.
Getting lucky doesn't teach you much and it's often hard to factor out how much of success was due to luck.
In sports there is a saying: great athletes make terrible coaches. Someone for whom a sport is as natural as breathing doesn't think about it, hasn't had to struggle, never spent months and years and days and nights and weekends and waking and dozing and sleeping and showering and eating and walking obsessing over it.
But the great coaches do. Because so many of them never made it as athletes.
Failure is a different kind of teacher from success.
On the other hand, a successful startup founder has seen one story. Let's say they went from founding to exit in 10 years. They know everything there is to know about their company, their market, and their specific journey. A lot of that is execution. Some of it is also luck (timing, uncontrolled variables like competitors screwing up or incumbents moving slowly or whatever.)
That focus is great for the success of a single company, but investing isn't like that. There isn't one story. What worked for Airbnb or Dropbox or Gusto might be what the company in front of you needs to do. It also might be the worst thing for them to focus on.
So having a wide range of experiences to pull from—whether that is working at companies in various industries, advising founders at different stages and/or around different issues (hiring, product strategy, technical architecture, etc.)—and thinking through a wide range of problem might be a better background for investing.
VCs don't dive deep on a single company and devote everything to it. They have to be more flexible. Their "founder/market fit" isn't one market, it's a meta-level above that.
None of this is to discount the experience or expertise or value of successful founders (that would be absurd) but just to say that it may not be the case that the most successful founders would be the best VCs. It may actually be the opposite!
For parallels, the best players in many sports are horrible coaches, owners, general managers, etc. The "smartest" people in academia are rarely the best teachers. They are different skillsets. The important thing is to match the skillset of the individual with the role. "Successful company founder" sounds like it would be close, since that's what you want—more successful company founders—but what you actually need is a bit different.
Just to clarify, what exactly do you mean by this? VCs or startups trying to lose money? For what purpose?
VCs trying to lose money on either an individual investment, or else on their entire portfolio. Some reasons why this happens:
- New VC funds engaging in 'logo shopping', where they invest in later staging companies everyone knows about so that they can put the logo on their webpage and establish credibility, even if they know the investment probably isn't going to be profitable at the valuation where they invested.
- VCs are often misaligned with their LPs. E.g. the VCs are taking 2% management fees on a massive fund, and know it will be ten years before anyone knows their returns so they don't have much incentive to try to be good at their job.
- Special situations. E.g. let's say Saudi Arabia is happy to invest in things like Bitcoin mining or Uber even if they think those investments will lose 10% of their value, because the only thing they really care about is hedging their risk of having their bank accounts frozen by the U.S. government.
- Cases where an investor puts money into a startup and takes a board seat with the goal of purposely killing it so that one of their larger portfolio companies can purchase the assets in a fire sale.
- Cases where a VC comes up with some scheme to try to shift LP money from their newest fund into a startup from their previous fund to artificially inflate their returns.
None of these are necessarily common individually, but collectively things like this are common enough to distort valuations across the board and make it so that looking at what other people invest in and at what valuations isn't a great way to make decisions.
edit: Consider also that if you look at the statistics about how the vast majority of VC funds lose money, these all come from before the 10x growth in early staging funds that we've seen over the last 10 years.
As a startup founder you only need to start one of the best 1,000 or so startups of the year to do really well. But as an investor you need to invest in one of the 5 or 10 best startups of the year in order to make a ton of money for your fund. And the best startups often (but not always) have a ton of people trying to get into the deal. So if a startup could get 25 term sheets and only 1 in 25 of those investors are crooked, then the other 24 investors have to then decide whether they're going to gamble that this investment pays off anyway even though it's priced at way over what is economically rational. It's maybe a little more nuanced than that, but that's the basic idea.
How?
Investing in 10 companies where 1 wins seems much easier than building 10 companies where 1 wins.
No you don't! They're no shame in being a generalist, but by definition it makes you NOT a specialist.
Maybe they specialize in repairs as opposed to new construction?
Also, they could have meant "all kinds" as a figure of speech (not "every kind" but "various kinds").