Most business executives and academic researchers essentially exist in separate countries without a common language. With a foot in both worlds, I am determined to bridge this divide and bring useful, actionable insights from academia to the executives who can use them. My business career has been varied, leading up to my current position at Oracle and personal venture investor. I also spent time earlier in my career earning my doctorate and teaching at three universities.
Kauffman Fellows Press has published a book I co-wrote with Joe LiPuma, from EM-Lyon in France, entitled No Ivory Tower: How Management Research Can Transform Your Business. The book addresses the question: “What can executives and entrepreneurs learn from academics about running their business?”
Faculty are rewarded primarily for writing peer-reviewed academic journal articles. When academics do consult for business or write for a broader practitioner audience, they typically focus on a single idea coming from their own research, which can result in one article being unnecessarily stretched into a full-length book.
On the other side, executives may respect academicthinking but consider it irrelevant to their rough-and-tumble set of daily challenges. Managers also lack the time to sort through a large academic literature, which can be both physically and linguistically challenging for them to access, to glean the fraction of content providing actionable insights for running their business. This is the situation Joe and I sought to change.
In this article, I ask the same question for venture capitalists (VCs): what subset of academic literature has results that are interesting, relevant and actionable for practicing VCs? With input from several prominent members of the finance faculties at the University of Chicago and Harvard University,I have selected recent venture articles from academic literature to summarise here. As with any “greatest hits” collection, the selection is somewhat subjective.
As Joe and I have done in our book, for each reviewed article I provide a takeaway thesis, a summary, and a brief discussion of what it means for practitioners. I startwith Kaplan, Sensoy and Stromberg’s investigation of whether VCs will maximise return on investment more by focusing on the management team or the business plan for start-ups seeking funding – this dilemma is commonly referred to as the “horse versus jockey” debate, and has prominent adherents on both sides. I then turn to Nanda and Rhodes-Kropf’s description of how VCs do, and should, change their investing approach and goal depending on the overall macro-level of funding of startups in general. Lastly I use an article I co-wrote with Hsin- Hui Chiu and Richard Smith to address a debate about whether VCs can predict stock market movements when selecting times to take their portfolio companies public, or instead simply react to recent stock market movements.
For Ball’s full article, please go to page 22 of our February magazine.