Arthur Rock: Investing in People and “Strategy vs. Tactics from a Venture Capitalist”

1/ In Venture Capital (VC): An American History Tom Nicholas writes: “It is often argued that venture capital means investing in three areas: people, technology, and markets…Arthur Rock, a pivotal venture capitalist responsible for some of Silicon Valley’s most influential investments, focused largely on the people side. Tom Perkins, cofounder of Kleiner Perkins, filtered investments through the lens of technology. And Don Valentine, founder of Sequoia Capital, emphasized the importance of market size.”

2/ Arthur Rock invested in Intel Corporation, Apple, and other major firms. Rock served in the US Army during WW2.

3/ At Context VC we are students of Startup and VC history. A recent essay we re-read was Arthur Rock’s “Strategy vs. Tactics from a Venture Capitalist.” Here are some quotes from the essay that we thought were especially insightful.

4/ “Good ideas and good products are a dime a dozen. Good execution and good management-in a word, good people-are rare. To put it another way, strategy is easy, but tactics-the day to day and month to month decisions required to manage a business-are hard. That’s why I generally pay more attention to the people who prepare a business plan than to the proposal itself.”

5/ “Another VC I know says, somewhat in jest, that the first thing he looks at in a business plan is the financial projections. Frankly, how anyone can figure out what sales and earnings and returns are going to be five years from now is beyond me.”

6/ “I also look at a person’s motivation, commitment, and energy. Hard work alone doesn’t bring success, of course, but all the effective entrepreneurs I’ve known have worked long, hard hours.

7/ “Belief in the business, clearly, is critical. If you’re going to succeed, you must have a burning desire to develop your idea; you must believe so firmly in the idea that everything else pales in comparison. I usually can tell the difference between people who have that fire in their stomachs and those who see their ideas primarily as a way to get rich. Far too many people are interested in building a financial empire instead of a great company.”

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