How Working in Venture Capital is just like Working in TV
By: Mike Raab
Tags: Entrepreneurship, Work, Media, Television, Venture Capital

Having worked in both VC & TV— it’s really the same game.

Both venture capital and television are built upon investing in ideas from creators capable of execution

In January 2018, I moved to San Francisco to pursue a new career opportunity: venture capital investing. I spent the first few years of my professional life working in the entertainment industry in Los Angeles, including significant time in strategy roles at Twentieth Century Fox Television, one of the most prolific producers of scripted television content. My career path thus far has been anything but linear, and I’m often asked how difficult it was to adjust to a new career. The truth, I tell people, is that it wasn’t actually that big of an adjustment. Pattern matching, which prominent VC John Doerr of Kleiner Perkins refers to as the “secret sauce” of successful venture investing, reveals that the templates behind the businesses of television and venture capital are eerily similar:

They’re both hit-driven businesses. The portfolios of investors and TV studios / networks both follow an extreme power law, where a few hits pay for many losses. Outsized returns from a few “homerun” investments (The Simpsons; Amazon) are responsible for a vast majority of ROI. Most investments have meager success or fail entirely.

The portfolios of investors and TV studios / networks both follow an extreme power law, where a few hits pay for many losses. Outsized returns from a few “homerun” investments (The Simpsons; Amazon) are responsible for a vast majority of ROI. Most investments have meager success or fail entirely. VCs and TV execs are wrong more often than almost any other professionals. Initial investments are often built on fiery conviction in their potential for outsized returns — and yet most shows and startups don’t reach this potential — meaning these professionals often find their theses proved wrong over time. If other professionals were wrong as often as VCs & TV execs, they’d undoubtedly be fired. Yet, the conviction and confidence behind their investments and beliefs in what will be successful is nearly unwavering (until it is).

Initial investments are often built on fiery conviction in their potential for outsized returns — and yet most shows and startups don’t reach this potential — meaning these professionals often find their theses proved wrong over time. If other professionals were wrong as often as VCs & TV execs, they’d undoubtedly be fired. Yet, the conviction and confidence behind their investments and beliefs in what will be successful is nearly unwavering (until it is). Fear-of-missing-out (FOMO) & copycats. Since they’re both hit driven industries — TV execs and VCs alike are extremely afraid of missing out on trends. Once a TV series or startup shows potential to be a “homerun,” professionals invest in the trend and in copycat projects, hoping to cash-in on the heat. See: singing competitions (American Idol, The Voice, The X-Factor, The Four, Rising Star, The Sing-Off, Nashville Star, etc.) and electric scooters (Bird, Lime, Grin, Skip, Scoot, Spin, Uber / Jump, Lyft, Yellow, etc.)

Since they’re both hit driven industries — TV execs and VCs alike are extremely afraid of missing out on trends. Once a TV series or startup shows potential to be a “homerun,” professionals invest in the trend and in copycat projects, hoping to cash-in on the heat. See: singing competitions (American Idol, The Voice, The X-Factor, The Four, Rising Star, The Sing-Off, Nashville Star, etc.) and electric scooters (Bird, Lime, Grin, Skip, Scoot, Spin, Uber / Jump, Lyft, Yellow, etc.) Investments happen in stages. As viability of concept or customer traction is proven, investors put in more capital, viewing the opportunity as de-risked. For TV series, the progression is as follows: script order > pilot order > series pickup > season renewals. In venture capital, the stages are less formal, but generally progress: angel / pre-seed > seed > series A > series B, etc.

As viability of concept or customer traction is proven, investors put in more capital, viewing the opportunity as de-risked. For TV series, the progression is as follows: script order > pilot order > series pickup > season renewals. In venture capital, the stages are less formal, but generally progress: angel / pre-seed > seed > series A > series B, etc. It’s all about the talent. At the end of the day, both television and venture capital wouldn’t exist without the creators — writers and entrepreneurs. These boots on the ground hustle to make their vision come to life, while their respective financiers take pitches and judge the viability of their ideas in the market. There is a heavy preference for experienced talent who have demonstrated success in the past, and cultivating relationships with talent is imperative to success as a VC investor and TV exec alike.

For both professions, it’s imperative to develop relationships with creators and hone your trend-spotting and pattern-matching abilities. Realizing these similarities early on allowed me to quickly recognize analogous situations, opportunities, and mistakes — which has made the transition from television to venture capital smoother than one might expect.