You can read the long version of the story on Jeff Bussgang’s blog, but in short, the “Circle of Envy” in Private Equity is spelled out the following way:
- Entrepreneurs envy VCs b/c they get to make a lot of money collecting management fees, and not working too hard to earn their salary.
- VCs envy Buyout investors, who get to manage much (much) larger funds with similarly large management fees to enjoy, and an even easier life.
- Buyout investors envy hedge fund managers who get to cash in their carried interest every year, and who enjoy quicker path to liquidity for their investments. Think about it: getting VC-like carry (typically 20%) to play in the public market.
- Hedgies envy… entrepreneurs – who get to build companies serially every 5/6 years, make a ton of money and can take long breaks in between startups.
- Entrepreneurs envy… you get it.
An amusing read, with a few real traits. Update: note that I am not agreeing with the claim that investors don’t work hard – many of them really do.