the paperwork, they take advantage of entrepreneurs who haven’t been through
this before. They do things on terms that favor them in a way that really can’t be
justified—that take advantage of their ignorance. It’s not a good way to do
business. Some of the VCs try to rationalize it, “This is just the way things are
done.” Well, I’m sorry but they’re wrong. Why do you think venture capital also
enjoys a reputation as “vulture capital?” It’s not an accident; it doesn’t have to
be that way.
Livingston: Did you try to change this when you joined Accel Partners?
Kapor: Yeah. And I think that a more nuanced version of what I was just saying
would be that there are contradictions inherent in the venture capital business
because there are significant aspects of what VCs do, including Accel, that are
collaborative with entrepreneurs, and there are other aspects that are not. I
thought that Accel was more different than I ultimately concluded they were.
But I don’t think that they were worse than everyone else. There are norms and
practices that cut across individual firms that are really problematic. So I tell
people, “Know what you’re getting in for. Here’s the way it works.”
If the VCs were more transparent and disclosed stuff so that entrepreneurs
could make a choice, that would be better. They wouldn’t have to change the
terms, just disclose them and explain what they mean, and what’s likely to happen.
But they don’t do that. They see it as a negotiation in which having information
that the other side doesn’t have gives you an advantage. It gives an
advantage in terms of that individual negotiation, but if you’re trying to form a
genuine partnership where you have repeat encounters and you withhold critical
information in the first and most important one, you’re undermining longterm
collaboration.
Why should they trust you? What they’ve demonstrated is that you are
going to act in your own self-interest at my expense if you know better than me
about something and you don’t feel under any obligation to share that. That’s
actually not collaborative. But it’s completely standard.
You know why VCs are like this? It’s not that they are bad people; it’s the
limited partners. And who are the limited partners? Our great institutions—
Harvard University, Stanford University, UC Berkeley. So if you want to point
up the chain of accountability, when those people stop measuring performance
Mitchell Kapor 101
just based on the return numbers, things could change, because they’ll change

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