It's true. With the ascension of Kent Goldman and Phin Barnes to Partner, Christine Herron leaving to join Intel Capital and me starting Brooklyn Bridge Ventures, there are no longer any people at the Principal level.
Oh, did you think I meant something else? :) I just thought today was Salacious Headline Day in the VC blogging world so I thought I'd chime in.
In all seriousness, Kent and Phin are two of the most principled professionals I know in the venture capital world--and their promotions are well deserved after four years of hard work at one of the most principled firms I know.
It's no accident that the Principal level, which--for a brief moment after I got promoted and before Christine got hired by Intel--had four of us, is now down to zero. The Principal level at any firm is a bit of an awkward stepchild. It's a little bit like adding "Interim" to a coach's title. They're doing much of the same work, but there's something about public signaling that kind of makes others think they're on some kind of probation. Is this person going to be here for the long run? What kind of sway do they have internally? Are they jockeying for position with someone else? Not only is it not quite clear to the outside world but sometimes it isn't even clear internally. Sometimes Principals can lead deals and sit on boards, sometimes they can't.
Plus, you simply don't have the same economics--you're the rookie who is killing it but who isn't up for the fat free agent contract until they've got more years of service time.
When I first sat down with Josh back in September of 2009 to talk about joining First Round. He told me that he already had three great people "on the bench" and there simply wasn't enough "playing time" as it was--so it wouldn't be clear how he could ever really get me into the game. (Clearly I'm riffing off Phin's college ball analogies here.)
That's what being a junior person at a VC firm is like--you do the best with the minutes you get. That's also why the bar is so high for the kinds of folks that get hired. In a way, you need to *already* be making an impact in the venture ecosystem, because if you're not an impact player, you're simply going to get lost in the structure. (I wrote a post about how to do this a while back...) That's why I'm not hiring any junior investment professionals. There's no sense in drafting an impact player that isn't going to be able to fulfill their potential during their tenure because of the structure of the job.
As a Principal, you're always going to be in an uphill battle to make a name for yourself. The paths that Phin, Kent and I took to becoming Partners were roads less traveled and statistically harder. You've got a better shot at joining a VC firm's partner ranks as a successful entrepreneur than as a junior venture professional--and I think you're going to see less and less new Principal positions over time.
You'll still see analysts in bigger firms--people working on cashflow projections, market research, and being the "on the ground" folks showing up to every last startup pitch event to turn over every rock--but they're not going to be decision makers. It will be clear that those are capped positions that get refreshed every few years like working at a bank. It's a great role for seeing a lot of ideas and learning a ton for more experienced folks, but at some point, you're going to want to figure out how to gain the credibility to bridge the big gap between an analyst and a partner making the call and being a value added boardmember.
A couple of years ago, we used to have a Junior VC dinner in NYC. Since then, Eric Wiesen, Mo Koyfman, Phin, and myself have become partners, Sarah Tavel and Mark Davis have gone over to the operational side, Melody Koh has gone off to grad school and Andrew Parker (undoubtedly the next partner promotion along with Thatcher Bell) went off (theoretically) to Boston.
Is this the "Death of the NYC VC Principal" post? Will Schlaf be the last one standing or will it be Tom Loverro? We shall see, but the opportunities for those with too much experience to be an analyst seem to be drying up as more and more venture firms find that this "middle child" position isn't the most efficient use of talent.