Brad Feld

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Why Scientists and Engineers End Up on the Wrong Side of the Value Equation

Nov 05, 2004

This morning I hosted a presentation by the MIT Deshpande Center about their program to a group of Colorado VCs. I’m really excited about what the Deshpande Center is up to and will blog about that separately. Steve Halstedt from Centennial Ventures – a long time VC and one of the guys I’ve learned a lot from (we were both on the Raindance board together) – sat next to me and wrote the following down in the middle of the meeting and handed it to me.

Why scientists and engineers, who know so much, make so little compared to VCs (or investment bankers, or trial lawyers) who know so little.

   Time is Money

   Knowledge is Power

   Power = Work / Time (from high school physics)

   If you substitute Knowledge for Power and Money for Time

   Knowledge = Work / Money

   Using a little basic algebra (about the amount most VCs remember) and arranging terms, you get

   Money = Work / Knowledge

   For a given amount of Work as Knowledge apporaches zero, Money becomes infinite.

   This explains the difference in market value between scientists/engineers and VCs.