Fred Wilson's avatar demonstrates his awareness of branding.

Having worked in VC and also in marketing, I’ve been thinking a lot about VC marketing, that is how VCs market themselves. If you sell something, be it bubble gum or venture capital, you engage in marketing. Traditionally, VCs have been absolutely crap at marketing because they failed to recognize this basic premise. I think this has been primarily because VCs have thought they were somehow “above” marketing, too important for it. Fred Wilson changed all this in my opinion.

Some years back a handful of VCs built strong brands that helped them attract the best and brightest entrepreneurs. Folks like KPCB and Sequoia trolled the Bay Area, found amazing entrepreneurs and backed companies that eventually became the eBays and Googles of the world with huge multi-billion dollar exits. These spectacular exits signaled to entrepreneurs across the world, like fireworks in the sky, where to go for capital and sage advice.

Here’s the problem with that approach: it’s all about being in the right place at the right time and even then it’s really hard to do. It takes a long time, is difficult to reproduce and doesn’t necessarily prove causation that you are the best and the brightest. It could just mean you got lucky once and then got better access to deal flow based on that lucky strike (I am not saying this is the case, I am just positing it as an existential possibility). It’s also a strategy that is hard to duplicate if your address doesn’t contain “Sand Hill Road.”

So what do you if you’re not an incumbent player? How can you display your fireworks for all the world’s entrepreneurs to see (show your plumage, if you will) to get great deal flow access?

Incumbent Sand Hills VCs = Oligopolists (or perhaps Local Monopolists) within their specific verticals. Sand Hill doesn’t need to market or advertise to bring in “customers.” They just bask in their storied histories while the customers come to them, like Ma Bell (got the ill communication). NYC (and other non traditional VC market) VCs = Market Entrants. If you’re a newcomer you must get the word out. Think MCI vs. AT&T in the long-distance phone wars. You must market.

That’s exactly what Fred Wilson and his partners at Union Square Ventures did. When I started my career as a VC in NYC in 2005, everyone knew Fred’s name and had tremendous respect for him, but he was just another star in the sky. And remember, Flatiron had some names we all remember, but not necessarily for such great outcomes (Kozmo.com anyone? Alas, the bubble was hard on everyone, not just Fred.) But let’s not misremember history here. Fred invested in Twitter because he was a genius marketer, not the other way around. Fred didn’t invest in Twitter, earn a gold-plated reputation and then invest Foursquare. No, no, no. That would be the Sand Hill Road way. Fred made a name for himself by creating a brand first. He selected a target: Web 2.0. He positioned his product: willing to take risks on young, bold entrepreneurs. He established placement: with his simple, easy to find URL http://avc.com (what could be more memorable than “A VC”?) Then he promoted his product: he blogged, twittered and spoke at meetups and other physical gatherings almost every day of the year. Fred thus established a brand. This is marketing 101. This brand then opened doors for Fred and USV.

Fred Wilson succeeded in turning venture capital on its head by inverting the VC branding model. First he achieved fame, then he found the great entrepreneurs (and hopefully the exits soon too). Need some proof of this? Check out the Top 10 VC Blogs. Two of the top five are not from California (#1 Fred in NYC and #4 Brad Feld in CO). Also note how the name brand firms are underrepresented in the Top 10. If you look at Twitter activity, the picture is even more convincing. Particularly early on in Twitter’s days, NYC and small market VCs were all over Twitter while Sand Hill was late to the game. Why? NYC had relatively more to gain on the new medium and thus could assume more risk. Fred wasn’t afraid to take these risks. He doesn’t view being in the limelight as somehow beneath him. I still don’t see that many name brand Sand Hill VC GPs on Twitter. They prefer to maintain an aura of exclusivity. They don’t want to take down the velvet rope just yet.

What does all this mean? Sure Sand Hill Road is a clubby, old boys network, but you can circumvent it through good ole business fundamentals. There’s no reason things need to be the way they are. Traditional wisdom says that being smarter and working harder won’t get you anywhere in venture capital, but I disagree and I think Fred might too. It’s not all about being in the right place at the right time. If you have good ideas and work hard, people might just listen and that can be just as valuable as a coveted Sand Hill Road address.