The Circle of Envy

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.

  • Yosef

    Moral of the story:
    Be happy where you are!

  • Jeff

    I agree with bullets 2,3 and 4 but not the first. I have never met an entrepreneur who envies VCs. A VC a an employee. Entrepreneurs envy other entrepreneurs.