Last week Forbes ran a story in which Fred Wilson discussed the challenges facing the venture capital industry. According to the piece, he said, “The biggest issue: there is simply too much money.” I have the utmost respect for Fred, but I think framing the problem as “too much money” is like saying gamblers lose in Vegas, because they’re rich. People don’t lose because they have too much money, they lose because they don’t know how to play.

At the end of the day, the funding ecosystem of Silicon Valley is a market. On one side is money and on the other side is talent. It may be heretical for me to say this in the current entrepreneur-centric zeitgeist, but the problem with venture capital isn’t too much money, the problem is too little talent, too little vision, and too much lean-flavored Kool-aid being drunk by both VCs and entrepreneurs.

One of the side effects of the decreasing cost of starting an Internet company is that many more people became entrepreneurs. On the surface, this seems like it would have had the effect of increasing the talent pool by giving VCs more options to invest their money. But in reality, it thinned out the talent across a much wider swath.

Imagine if the NBA let everyone with $100K start their own team. Instead of 30 teams, we would have thousands of teams drawing from the same pool of draft choices. While people would trumpet the new “open NBA” and towns like Bakersfield would celebrate their hometown players, team rosters would be stocked with high school benchwarmers, and the actual game on the court would be horrific.

Of course, every now and then a player or a team would emerge from the chaff, like Jeremy Lin, and the press and people would gobble it up as an indication that anyone can be a star. The odds might even work out that this is a decent investment gamble. But in reality, even the surprise standouts, the Jeremy Lins, wouldn’t win you a championship like Kobe Bryant. If VCs want to remain relevant and competitive, they need to stop competing in the D-League. Stop trying to win the NBA title by buying a hundred $100K teams stocked with high school players in the hope that one of them turns into the Lakers.

Last September I was having a conversation with Luke Nosek and I remarked that I thought Elon Musk was crazy (in a good way) for sinking every last dime he had into Tesla and SpaceX. Luke said to me, “But if you look at Elon’s record of success he should actually be taking more risk, not less.”

Of course, Luke was right. From Zip2 to PayPal to Solar City to SpaceX to Tesla, Elon Musk was almost a sure bet. I don’t know much about building rockets or electric cars, but I don’t think there’s anything lean or cheap that can be built with $100K in these industries. I also pray that Elon isn’t launching the Falcon 1 as a minimum viable product. Elon is expensive. The industries and challenges he pursues are expensive. But like Kobe, he’s worth the investment because he’s a proven talent who wins.

The lesson for VCs of Elon Musk — and others like him tackling big challenges — is that you don’t have to get stuck playing the $100K angel game. It’s probably a good hedge to keep a hand in that world and drop a few dollars on Y-Combinator, but don’t let that segment define you. If as Fred Wilson said, the problem is that you have too much money, go find talent that can return big on big bets.

The challenge facing VCs is actually a classic innovator’s dilemma. They’ve become drunk on the cheap and easy. But if they don’t find the courage to disrupt themselves they will soon find themselves obsolete. On this issue, I am in total agreement with Fred. The courage to give up what seems like a sure thing is what it will take for the venture capital industry to remain relevant long term.

For example, in the mid-80s, Intel made most of its money from memory chips, but the prices in the market were starting to decline. In a mock ceremony, Gordon Moore and Andy Grove fired themselves and returned as new President and CEO determined to turn their back on memory chips in favor of microprocessors. The rest is history.

VCs now face a similar dilemma and must ask themselves if they, like Gordon and Andy, have the will to break their addiction to the cheap. Will they have the courage to bet big on entrepreneurs who are tackling problems that require heavy investment and look different than what everyone else is doing?

Gordon Moore and Andy Grove have shown us that self disruption can be wildly profitable. Elon Musk has shown us that big bets don’t necessarily mean risky bets. Angels betting on lean startup iphone apps don’t have the money to play this game. Only VCs have the deep pockets to make this happen. The question now, is will they?

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