Why VC Veteran Keith Rabois Says Founders Make Better Investors

According to Business Insider, longtime venture capitalist Keith Rabois offered direct advice for young professionals hoping to break into venture capital during a recent appearance on “The Rise” podcast. The Khosla Ventures managing director and Opendoor cofounder stated that aspiring VCs should “either join a startup or found a company with almost no exceptions,” particularly if they have technical backgrounds. Rabois criticized what he called “superficial” motivations for entering venture capital and emphasized that operational experience provides three key benefits: confidence in career choice, better job performance, and increased credibility. He specifically advised against new graduates pursuing VC roles immediately, suggesting instead a two-year associate position to evaluate fit before joining a portfolio company to gain hands-on experience.

The Operational Experience Advantage

Rabois’s perspective reflects a growing recognition within venture capital that operational experience creates superior investors. While traditional VC recruiting often favored banking and consulting backgrounds, the most successful firms increasingly prioritize founders and operators who understand the entrepreneurial journey firsthand. This shift acknowledges that evaluating startups requires more than financial modeling—it demands empathy for founder struggles, understanding of product-market fit dynamics, and practical knowledge of scaling challenges. As venture capital becomes more competitive, firms seek partners who can offer portfolio companies genuine operational guidance rather than just capital.

Redefining the VC Career Ladder

Rabois’s recommended path—starting as an associate, then joining a portfolio company before returning to venture—represents a significant departure from traditional career progression. This approach addresses what many consider venture capital’s “experience paradox”: how can investors evaluate businesses they’ve never built? By gaining operational experience at a high-growth startup, aspiring VCs develop the pattern recognition necessary to identify promising opportunities and the credibility to attract top founders. This model also creates more diverse investment teams with complementary skill sets, potentially reducing the groupthink that plagues many venture firms.

The Risks of Delayed Entry

While Rabois’s advice has merit, it presents practical challenges for aspiring investors. The opportunity cost of spending years in operational roles before transitioning to venture capital can be substantial, particularly given the compressed career timeline in technology. Additionally, this path assumes that successful operators will naturally transition to effective investors—a skill set that involves different competencies including deal sourcing, negotiation, and portfolio management. There’s also the risk that by the time operators are ready to enter venture capital, they may have missed critical networking opportunities and industry relationships that traditional paths provide through early immersion in the ecosystem.

Broader Implications for Venture Capital

If Rabois’s perspective gains wider adoption, it could fundamentally reshape how venture firms recruit and develop talent. We might see more structured programs that facilitate movement between venture roles and portfolio companies, similar to the model Rabois describes. This could also pressure traditional MBA programs to incorporate more operational content and startup experiences. For experienced investors like Rabois, this approach represents an opportunity to build more effective investment teams, but it also risks creating homogeneity if every firm prioritizes the same type of operational background.

The Evolving VC Career Path

The venture capital industry appears to be moving toward hybrid career models that blend financial analysis with operational expertise. As Delian Asparouhov’s lessons from Rabois suggest, developing both judgment and relevant expertise requires diverse experiences. The most successful future VCs will likely follow nonlinear paths that include periods of building, investing, and possibly even returning to operational roles. This evolution reflects venture capital’s maturation from a niche financial service to a professional discipline requiring multifaceted skills. For aspiring investors, the message is clear: the days of straightforward paths from analyst to partner are ending, replaced by more circuitous routes that prioritize real-world building experience.