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Finance a la shmoop what are five questions you can expect to be asked in

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a venture capital investing interview? okay so if you're watching this video

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we're gonna assume you're not an already successful entrepreneur who takes a seat [Woman watching shmoop video]

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as an EIR or entrepreneur in residence which is a completely different kind of

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interview in that case you're likely investing five million or so of your own

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dollars into the fund as a limited partner and then opining on which

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investments you like and don't like as the firm is rating your rolodex and in

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this case it's more like the firm is interviewing you than the other way [Men appear beside woman]

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around so we're gonna skip right through the EIR thing we're also going to

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assume that this is a Sand Hill Road Silicon Valley VC firm that you're

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interviewing stunningly few great companies have been built outside of

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that little bubble on earth so there is understandably not a lot of demand from

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investors to throw money at such tech hubs as Clearwater Florida Nashville

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Tennessee and burnt corn Alabama you know that's a real place but ok so you

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just graduated the business school at Stanford or you have a PhD with a whole [Woman standing beside her details]

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lot of work experience at Google or Facebook or Amazon or one of the blessed

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hot companies fast on the rise you're likely in your mid to late 20s

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and you're not really sure what you want to do with your life maybe become an [Woman walking through the park]

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investor maybe become a founder of a hot company yourself you just haven't found

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that great idea yet or maybe you want to be a very early employee at the next

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Google or Facebook hundreds of amazingly talented

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candidates want your seat they're all fighting for them and there are precious [Woman with candidates for interview]

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few seats you actually want that are available like there's a lot of really

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bad VC firms you don't want to work for you note that only a dozen or so venture

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funds are actually demonstrably good most of them kind of sort of almost

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break-even year after year but have a prayer of something grey maybe someday

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but investors couldn't get into Sequoia or kleiner or f8 so the overflow goes to

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the next dozen or hundred or thousand and yes,

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there are actually thousands of mediocre VC firms who exist and yes, only a few

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of them are actually good meaning that they have returned to investors

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consistently better results than they could have gotten just investing in an

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S&P 500 index fund so beware that you're entering the lottery ticket business [Person scratches lottery card with coin]

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yeah that's kind of what the world of VC is great work if you really know how to

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flip head 16 times in a row and we have an award-winning video on that subject

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if you want it first up why are you doing this? why are you here

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and the person asking you that question will have kind of some rancor in their

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voice with the eyebrows knitted... best answer in the world because I couldn't [Baseball thrown into air from stadium]

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throw a curve ball yeah if we could all be pitchers and make like a million

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bucks a game like why wouldn't we do that but we can't so we don't and well

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here we are but you give it to them straight I don't know what I want to be

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when I grow up and most VC's will laugh at you with no investing track [VC woman laughing]

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record if you tell them that you want to be a general partner at the firm in

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order to get a portfolio to run money to manage well you have to have a long

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track record of making money for shareholders a magnetic history that

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attracts the best entrepreneurs to want to take money from you instead of the 87

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others all throwing money at them and so on so be straight you don't know all

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right second question what do you know? well you're an ABD; all but dissertation

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PhD from MIT now expert in underwater robotics [A robot under water]

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particularly with the military applications

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well you detail for them the challenges in operating machinery in cold saltwater

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battery issues volts recovery when one fails the cost structure the

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state-of-the-art like what the Russians and Chinese are building and what

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they're doing in Atlantis and then you regale them with your amazing knowledge

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on this arcane but hot investment area like imagine digging for gold [Robot digging under water]

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robotically under the sea under the sea and then you dangle the golden nugget a

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golden nugget yeah you talk about the discovery show gold and dream about an

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army or fleet of automated underwater drilling robots who just drill all day [Woman celebrating]

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and night at non-union wages and return a week later with pot loads of gold well

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who knows maybe one of the VC's will be so enamored

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the idea they'll want to angel fund you to go start that company and you amused [VC woman celebrating with arms in the air]

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yourself that the VC's who funded Google made like 8 billion bucks

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the founders made 80 billion so in a bake-off being a founder of a company

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that does well is always preferable to just being the one who poured coffee and [Man takes sip of coffee]

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equity for them but being the investor right better to be the founder than just

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the investor all right third question what do you expect your day to be like?

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well early on in a VC career you're just smiling and dialing you literally do [Woman answers phone]

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nothing all day long other than email and cold call CEOs and key executives of

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hot startups asking if they need money well you'd better know this in advance

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it's called deal sourcing and it is the hazing entry job of the VC world so why

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do they need PhDs and Stanford MBAs doing this perfunctory task well because

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the VC firm has to appear smart on the other end of the phone line it's kind of

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a firm branding thing like an ego thing like the firm wants the best and [Candidates lined up for interview]

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brightest of the country to be their front end and firms always think they're

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better than they actually are or at least perceived the clients want

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the Harvard Stanford MIT moniker and so the VC's pay up for that highly

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synthesized talent and they pay a lot all right fourth question what do you

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want to earn? well if they are already asking you that question in the

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interview that's a really good sign they wouldn't be asking if they were trying

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to convince you to take a job as a business development exec at pre-

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bankruptcy.com yeah and the right answer whatever you pay will be just [Woman waving arms in the air]

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fine I'm sure you guys have a rep for being fair to your young people that's

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the right answer when they ask you about comp whether they do or don't VC's love

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hearing crap like that so feed the beast you're marketing yourself here not at a

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confessional right all right fifth question what happens if you wash out?

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well as we mentioned the VC business is largely the business of picking the

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right lottery ticket there are thousands of VC's actively managing money and only

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ten good deals happen in a year a good year so the odds of you washing out are [Man discussing chances of washing out]

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extremely high and if you do well there's no option to stand on the street

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corner holding up a sign saying we'll roll dice for food [Man holding sign to roll dice for food]

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so what do you do well I'm really good at creating financial models so I could

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work for an investment bank right? no you'll be too old when you wash out

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you'll be 30 or more oh well it could be a CFO for one of the companies right?

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no the skill of a VC is about investing high risk capital, not about counting the

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beans of an already going concern well after a long silence you ask about the [Boy sitting at desk with PC]

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interviewers belief and trust and tarot cards and psychics and ask about job

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opportunities in that field yeah you wash out there's no mercy

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so may the spirits be with you roll them well roll the bone...

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