If this were a ($/$) metric instead, my guess is that pattern #4 would disappear? Because I suspect VC has higher average staff cost vs grantmakers in government or philanthropy.
My subjective sense from working in 2 out of 3 is that VC is slower throughput per $, but mostly because i) more time spent on fundraising (vs endowments at least) and ii) bizarrely little downward pressure on the denominator (2% management fee felt like a de-facto rule among fund managers)
You’re probably right. Cost is probably a better metric than headcount, and typically bureaucracy scales supralinearly with headcount. The cool thought experiment would be if funders had the external pressure to disburse removed (e.g. giving federal agencies multi year $ vs annual budgets) would we see a dramatic drop in throughput? Probably yes.
Ha! You just invented calendar months for operational capacity! It’s a shame that many funding organizations, especially in the federal government, rarely experiment with operational design. This is giving me Monte Carlo vibes to explore throughput optimization and ‘what-if’ scenarios. Interesting.
Totally. In my experience funding organizations sometimes forget their primary goal is to get $ out the door, and over time invent ways to slow that down or create more guardrails. Would be really cool to examine internal decision making dynamics as a way to explain differences.
I did do a preliminary analysis of Melinda French and Makenzie also. Both have pretty high throughout but it’s hard to separate “science” philanthropy vs other types. The irony is that the more an organization tries to innovate one effect is that it builds more infrastructure and often slows throughput or at least agility. I haven’t yet examined dynamics over the lifecycle of an organization but it would be interesting to examine.
If this were a ($/$) metric instead, my guess is that pattern #4 would disappear? Because I suspect VC has higher average staff cost vs grantmakers in government or philanthropy.
My subjective sense from working in 2 out of 3 is that VC is slower throughput per $, but mostly because i) more time spent on fundraising (vs endowments at least) and ii) bizarrely little downward pressure on the denominator (2% management fee felt like a de-facto rule among fund managers)
You’re probably right. Cost is probably a better metric than headcount, and typically bureaucracy scales supralinearly with headcount. The cool thought experiment would be if funders had the external pressure to disburse removed (e.g. giving federal agencies multi year $ vs annual budgets) would we see a dramatic drop in throughput? Probably yes.
Ha! You just invented calendar months for operational capacity! It’s a shame that many funding organizations, especially in the federal government, rarely experiment with operational design. This is giving me Monte Carlo vibes to explore throughput optimization and ‘what-if’ scenarios. Interesting.
Totally. In my experience funding organizations sometimes forget their primary goal is to get $ out the door, and over time invent ways to slow that down or create more guardrails. Would be really cool to examine internal decision making dynamics as a way to explain differences.
Beautiful and creative analysis. Thanks for sharing
I'd be curious to see where Melinda French and her grants/gifts would land on this chart.
DARPA and the BTO in particular seem to be innovating with mechanisms to increase their number.
And I'm starting to see whispers of new mechanisms in VC as well (solo GPs, streamlined diligence mechanisms, AI-assisted screening).
I did do a preliminary analysis of Melinda French and Makenzie also. Both have pretty high throughout but it’s hard to separate “science” philanthropy vs other types. The irony is that the more an organization tries to innovate one effect is that it builds more infrastructure and often slows throughput or at least agility. I haven’t yet examined dynamics over the lifecycle of an organization but it would be interesting to examine.