November 28, 2007
In the last part of this series, I disagreed with my fellow panelists from NewTeeVee Live who argued that VCs have no business investing in content.
In this part, I am going to disagree with Dennis Miller’s argument from our panel that only VCs with a deep background in traditional media and entertainment will be able to invest in digital media successfully. Not because I think Dennis’s argument was self-serving (I’ll let you be the judge of that), but because I think it is just wrong.
With all due respect, I think Dennis had it back asswards. It is precisely because the new model is departing from the old model, and in the process transforming the economics of content, that VCs have any business investing in digital content. And I can’t think of a group generally less likely to grok the new model than guys from the old media and entertainment world. Sure, like any generalizations there are exceptions, and some old world media guys really get the new medium. But that is because they are smart, forward thinking, and have taken the time to be educated by the people creating the new model. Not because they were successful in old media. Even for them, their ability to be effective in new media is because of things other than their years in Hollywood.
Now, I have to give full disclosure: I am a digital media investor who got into VC in the late 90’s with not so much as a minute’s experience in old world media and entertainment (unless you count watching every Brady Bunch and Gilligan’s Island episode). So I am biased in believing one can become a great digital media investor without an old media pedigree, and my view absolutely positively is self-serving. But I think I have the added benefit of being right. History sure helps my case. After all, neither John Doerr nor Mike Moritz moved into venture on the basis of deep operating experience in a particular domain, right?
And, closer to home, my partner Jon Flint hasn’t written a line of software code in his life, and my partner Terry McGuire never worked in a biotech, but both are among the very best VCs ever to invest in those respective sectors. What has made them successful is, as best I can tell, great people judgment, great business judgment, a knack for knowing how to partner with different entrepreneurs in different circumstances; and, last but certainly not least, lots and lots of years doing it.
I am sure everyone on my panel would be tickled pink if we could end up as successful investing in digital media as any of those four have been in their respective areas.
But I’d be willing to bet a hefty sum that when we look back in five years at the top digital media VCs, the list won’t be dominated by old media refugees.