On Venture Capitalists

Marc Andreessen recently launched a new blog and he posted two really good posts on working with VCs (click here for part 1 and part 2 of the post).  My favorite quote is:

How to make a VC’s head explode, in one easy step: Point out to her that her compensation from carried interest should be taxed as ordinary income, not capital gains, since she’s receiving a fee for service and it’s not her capital at risk.

I confess that I hadn’t thought about this before reading it, but it does go a long ways toward explaining the explosive growth in venture capital over the past decade.  It’s basically a giant tax shelter!