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Venture capitalists only have two emotions: fear and greed. All their decisions are reached by balancing one against the other.

The central problem of the late-'90s business model was that customers got a free ride. In the balance between customers and capital, capital underwrote everything. Today, the best business plans are the ones where customers pay for their share of the cost. That's a very simple test. The customers pay either by acquiring lots of product or by underwriting the development. If the customers don't want your product now, why are you doing it now? I don't care what customers are going to want in the future. Don't tell me about the new, new thing.

Note: Business 2.0 is now part of CNNmoney and some older articles are no longer available

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I never invest in someone who says they're going to do something; I invest in people who say they're already doing something and just want funding.

Note: Business 2.0 is now part of CNNmoney and some older articles are no longer available

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Most investors prefer "learn-it-alls" to "know-it-alls."

If you experience great difficulty in raising money, it's not because VCs are idiots and cannot comprehend your curve-jumping, paradigm shifting, revolutionary product. It's because you either have a piece of crap or you are not effectively communicating what you have. Both of these are your fault. End of discussion.

Anyone who tends toward arrogance should be sentenced to a term of VC fund-raising during a tight market.

One of the things we are doing in the venture capital business by raising ever larger fund sizes and amassing larger pools of capital under management is creating problems and then making them the entrepreneur's problem.

And so we tell the entrepreneur that we need 20% of his or her company to solve our problem. I don't think that's right. I've said this before and I am going to say it again. The scarce resource in the venture capital business is great entrepreneurs with cutting edge ideas willing to work 100 hour weeks turning the ideas into businesses. The scarce resource is not capital and yet we are optimizing our businesses to be able to manage ever larger sums of capital.

There is nothing investors like more than a startup that seems like it's going to succeed even without them. Investors like it when they can help a startup, but they don't like startups that would die without that help.

The reason they like it when you don't need them is not simply that they like what they can't have, but because that quality is what makes founders succeed.

The average investor is a pretty bad judge of startups. It's harder to judge startups than most other things, because great startup ideas tend to seem wrong. A good startup idea has to be not just good but novel. And to be both good and novel, an idea probably has to seem bad to most people, or someone would already be doing it and it wouldn't be novel.

[Entrepreneurs] make lots of mistakes. They overestimate market size and underestimate how long things will take. But what happens most often is that entrepreneurs underestimate the importance of what they don't know. They know their competition as it is today, and they know that their own product is going to be significantly better. But they don't know what's going on in the backroom of their competition. You can't discount the possibility that the other guy is getting ready to replace the Model T with the Model A.