If you were to ask Scott Sandell what his first glimpse of life as a venture capitalist was, the answer might make you scratch your head.
After growing up in a middle class family in southeastern Connecticut, Sandell attended Dartmouth where he continued on the rowing team as he had in high school. Sandell always thought he wanted to be in the boat but, after an injury pushed him to the sideline, something changed.
“Due to an injury, I ended up being a coach as well; which I think was probably my first glimmer into what it’s like to be a venture capitalist,” Sandell said. “Because, I view us as coaches of entrepreneurs and partners of entrepreneurs; and that’s what coaches are for athletes.”
Sandell is a general partner at New Enterprise Associates (NEA) in Menlo Park, California where he heads up the firm’s technology investments. He joined NEA in 1996 and has led investments in companies such as Workday, Tableau, and Salesforce. Sandell has also made the Forbes Midas List several times, and was recently appointed chairman of the National Venture Capital Association (NVCA). His rich history in venture capital investing has given Sandell great insight into the state of entrepreneurship and the tech industry.
When it comes to his success in venture capital investing, Sandell compared it to rowing when he said, “Success happens in the margins.” Champion rowers train for thousands of hours for a race that typically only lasts a few minutes. When it comes down to the finish, especially at the high level, it is often decided by less than a second. Sandell said it takes constant work to capture that victory.
“Certainly, people outside of the venture capital business have, in my experience, a misperception of how easy the venture capital business is, and what it takes to be successful,” Sandell said. “When I got into into it, I had this assumption going in that I was going to have to work really, really hard. It was, by no means, a foregone conclusion that I would be successful. Another way of saying it is, I’ve always been very hungry and taken nothing for granted.”
When it comes to Silicon Valley, Sandell said that there are some stresses and strains to be sure. He made a special mention of the lack of human capital in places like San Francisco. According to Sandell in his lifetime he’s never seen more opportunity for innovation and value creation — and in more places — than we have now. But, he said, we need more talented people to help capitalize on these opportunities.
As an investor with as much history in the startup space as Sandell has, he said that the current state of VCs and entrepreneurs is a little overheated, but is ultimately in a good place. That relationship between entrepreneurs and investors has always been one that ebbs and flows depending on what resources are available, but we have recently achieved some balance.
“We have a relative equilibrium of innovation and entrepreneurial activity, and capital to finance it. And that equilibrium is a prerequisite to really good returns for everybody; the entrepreneurs and the venture capitalists and their investors,” Sandell said.
When that equilibrium is not present, someone gets the short end of the stick. Sandell asserted that for the last decade, up until the last two years or so, there was too much capital chasing too few opportunities. After the global financial crisis and the beginning of recovery, the amount of capital available was balanced out to meet the opportunities.
This insight is a part of what made Sandell a prime candidate to chair the NVCA. The NVCA is an organization that acts as an advocate for the venture community, working to help get support for policies that enable startup innovation. Sandell was appointed as the chairman at the 2014 VentureScape conference in San Francisco.
“I feel really privileged to be able to help guide this organization. The thing that most excites me is that the NVCA is increasingly taking on issues that affect the whole entrepreneurial ecosystem, not just the venture industry,” Sandell said.
Before joining NEA, Sandell had a unique career trajectory. After graduating from Dartmouth, he took a job at Boston Consulting Group to learn as much as he could about business. He then took a sales job at the then-startup C-ATS Software, where he moved to Europe to head up a new division. After the company’s exit, Sandell attended Stanford University where he achieved his MBA.
After graduating from Stanford he went to work for Microsoft on the project that would become Windows 95. When the woman he fell in love with moved back to the Bay Area, Sandell moved back as well. After some consulting work, he came on at NEA in 1996. According to Sandell, it’s never been something he’s taken for granted.
“I just feel incredibly fortunate that, as a kid from a small town in Connecticut, that I got to play this game,” he said.
In his own words…
What do you do when you really need to make a tough decision?
“I try to throw away the past and say, ‘What, objectively, is possible for this particular situation going forward? What’s realistic?’ Because, if you allow too much of the past to dominate your thinking, then you might under-appreciate something that actually has real potential.”
What’s one thing you do every day?
“I have to make a connection with everybody in my family. I have three kids and my wife, and I have to make a connection with each of them. It might not be for very long. It might be for two minutes, or five minutes, or 10 minutes, because our lives are all crazy. But, I go and I check in with them, and make sure they’re ok, and give them a hug, and tell them how much I love them — everyday.”
What’s the best thing you’ve read lately?
“By far my favorite book, recently, is The Boys in the Boat. It’s the story of the 1936 gold medal crew from the University of Washington that won the Olympics in Berlin in front of Adolf Hitler.”
What’s your favorite meal to cook?
“I do love to cook. I tend to keep it simple with things on the grill and fresh, local vegetables. There’s nothing better than a great piece of fish or grass-fed beef, or something on the grill with corn on the cob and a great salad and a nice bottle of wine.”