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Comment by timanglade | Hacker News Reader

I grossly underestimated the value of a warm intro in Silicon Valley before getting here, and still did before I started working for a VC firm. Coming in as an entrepreneur from smaller startup ecosystems in Boston & Europe, I was a bit puzzled by it — it seemed like unnecessary decorum or just a cheap ploy by VCs to maintain their inbox zero streak. Beyond the a16z process explained by Mr. Andreessen here, I should note that any third-party intro (to say nothing of a warm intro) will drastically enhance your chances at almost any firm even if they don’t require it. It’s a sign of hustle, diligence & genuine interest from entrepreneurs, even if the person that introduces you isn’t particularly warm about you or friendly with the partner in question. You’d be surprised how many founders fail to display that hustle/diligence/interest in discussions with VCs!

I wouldn’t overthink the warm bit too much. Usually just by virtue of being willing to make the intro your contact will be warm and exude warmth. But I’ve also seen partner take intros from people they barely know/remember/trust if the pitch is compelling. Just make sure you stay connected to partners and potential connectors way ahead of time, and that they know you & your business. When the time comes, an intro will be a no-brainer.

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> I should note that any third-party intro (to say nothing of a warm intro) will drastically enhance your chances at almost any firm even if they don’t require it. It’s a sign of hustle, diligence & genuine interest from entrepreneurs

The counterargument is that this attitude reinforces Silicon Valley as a non-meritocratic who-you-know culture instead of one that optimizes producing good products. (case in point, Andreessen's investment in Lucas Duplan/Clinkle)

Many founders can't get that kind of access, often due to class or other systemic factors. It's not "hustle," and in my opinion, that attitude is an albatross on the startup ecosystem.

You can still hustle from the edges inward, you just have to be a bit more creative about it. I probably can't hit up Marc directly but I bet I could find people who know him well enough to provide an intro but who aren't so well known themselves that they would ignore a cold call/email from me. Any firm you want to pitch has associates, secretaries, IT people, lawyers, and somebody who waters the plants, all of whom are there every day interacting with everybody else. It's a hustle-filter, not foolproof, not perfect, but efficient enough.

Marc Andreesen will chat with you on Twitter. Short replies, but at least he notices. Be compelling, even if you are on the wrong side of the world.

That is not a good example of VC access since a) Andreessen quit Twitter a month ago and b) Andreessen is so infamous for blocking people on Twitter for having dissenting opinions that it was a meme. (http://money.cnn.com/2015/12/23/technology/marc-andreessen-b...)

Fair enough. My exchange with him on twitter was minor and over a year ago. Other VCs are on twitter, as are people in their networks. I think that it is inauthentic to claim that there is no access to VC. You could reach them from the South Pole or anyplace that can get mobile data.

The tough part is to stand out, not to get 5 seconds of time. in the video he says that they fund 20 out of 2000 warm introductions, and probably 20,000 cold ones.

This challenge applies to all entrepreneurs though, those in San Jose and the South Pole. Only 20 will get chosen.

Many seed-stage investors don't require introductions. For instance, most companies that YC funds were not introduced or previously known, they just submitted a compelling application.

By the time a company is ready for series-A (where Andreessen invests), companies normally have a connection to someone (investors, customers, lawyers) who can make an intro. See http://www.paulgraham.com/fr.html under "Get introductions to investors" for some tactics.

Angel investors have a huge incentive to find companies with good businesses but no VC connections, invest personally, and then introduce them to their VC contacts for further investment. (That huge incentive is a 10 - 1000x return on their investment). So there are quite a few people scouting for these opportunities.

But I'd be curious to hear about examples where this doesn't work.

Someone correct me if I am wrong, but weren't some stats released a while back that said that 50% of the startups accepted by YC had been referred to them by the YC alumni network?

54.7% of accepted companies in the last batch did not have a recommendation. http://themacro.com/articles/2016/09/common-misconceptions-a...

It was not 50% but 45.3%

I don't know where you came up with the "Many seed-stage investors don't require introductions" theory, but you're mistaken.

First, the example you use--YC--is not even seed stage. It's an incubator, and is one of the extremely few opportunities where "just submit a compelling application" works.

Also, this is not even about angel investing. All business deals involve human beings and people tend to trust people who came through an intro. It's the law of nature.

It's naive to think that angel investors are just clamoring to fund any random startup just because they have no connection to VCs. From my experience it's very rare to find investors who don't have herd mentality--nothing wrong with that, they're just being human.

YC is seed stage - they invest 120k. That's what seed stages have traditionally been. We just see so many $1-4 million "seed stage" investments nowadays that we're all used to it.

Not in the context of this thread. The main point of what OP said was YC doesn't require intro because you can get money by "just submitting a compelling application". I don't know of any serious seed investor who operate this way. This model works because YC is an incubator. That's their shtick and it works for them. But most angel investors can't do that. That's why they rely on humans

"Not in the context of this thread" isn't a good excuse. They are the exception to the context of this thread. 120k is very much an angel-like investment.

That's pretty funny.

>non-meritocratic who-you-know culture instead of one that optimizes producing good products. [...]

To me, the "who-you-know" is not that difficult a bar. It's just basically playing the game of 6-degrees-of-Kevin-Bacon[1] in real life. The comments from tlb and nugget are ideas of how to do this.

It does not mean you had to be one of Marc's classmates at the University of Illinois.

>Many founders can't get that kind of access, often due to class or other systemic factors.

I think this can be a point of good discussion. Can you list some of those impossible obstacles to networking into people like Marc? Which class of programmers writing apps for the internet or the mobile space can't get access to SV VCs?

[1]https://en.wikipedia.org/wiki/Six_degrees_of_separation

> The counterargument is that this attitude reinforces Silicon Valley as a non-meritocratic who-you-know culture

Which largely manifests itself on the latter half of an investment cycle (i.e. now), and is less visible during the former when capital is constrained.

I'm in Montreal, Canada, and could probably get a warm intro to Silicon Valley investors.

I grew up in a small Canadian province, and my parents were middle class public servants. That's more privilege than some have, but it's hardly Ivy League and prep schools.

I made connections by starting a business in Montreal and talking to other entrepreneurs. Eventually I met some who are 1-2 degrees away from Silicon Valley.

I don't need investment for the work I do, but if I did I could try harder with my current network and make closer connections.

There were zero entrepreneurs in my family. Though, one thing I'll grant is that Silicon Valley is probably a bad place to try things and meet people for a few years. Too expensive. Montreal is cheap.

I've seen this in other areas too. For instance, banking recruiting at top schools has this crazy process of facetime and attending dinners, and showing up to lots of events. Does it correlate with success? Possibly, but weak at best. But the banks need some kind of first filter.

It's virtually impossible for a VC to take every proposal seriously. They need some kind of filter, and anything marginally better than "Read every tenth one that comes in" helps them out. Getting it via someone establishes reciprocity with the intermediary, and establishes that someone can find an intro. (This could be useful in selling)

It's rather ironic that many of the most famous people in the VC industry actually publish their email addresses [1], and then those same people will refuse any deal that comes to them this way. It's almost as if these addresses are there to perpetuate the myth that Silicon Valley is open to all comers as long as they've made something great, when the reality is that it's only open to a tiny sliver of entrepreneurs with great networking skills and/or those that are Stanford students/alumni.

[1] example: http://www.greylock.com/team/#reid-hoffman

Another way of thinking about the warm-intro suggestion is that most investors are overwhelmed with pitches and need a basic filter. Other expert humans are still the best filter they have. Which is kind of too bad, because all of those humans also face the same constraints on their time, network and expertise. While it may be far-fetched, it's interesting to think about how we might create a more automatic filter for startups that would surface those both of interest to the VC and with some chance of success, relying on self-reported data in Crunchbase and Angel List, biographical data about the founding team and its network, and maybe press and analyst reports about an industry.

I think it depends on the recipient. For example, I'm a VC and I give ~0 weight to intros from people I don't know well.

I get a lot of emails like: "Hey, remember how we met once at a demo day in 2014? Well my friend is raising for her company... do you want to talk to her? The pitch deck is attached." When I read that, I decide what to do based on the pitch deck, not the intro from someone I don't know. If someone cold emailed me with the same deck, I think I'd make the same decision.

I tried to get interest in Silicon Valley for my project. I'm in NYS US.

I tried a lot of advice on how to contact VCs. All my efforts were a huge waste of time.

So, I got a lot of advice, about introductions, how to write a pitch deck, and more. As far as I can tell, all of that advice was nonsense and, for me, a big waste of time.

Sure, I could get an introduction from one of my Ph.D. dissertation advisers, past president of one of the world's best research universities with one of the most famous computer science departments. But I doubt that many or any VCs know this guy personally and in that case I would have insulted my former dissertation adviser, the VC, and myself -- no thanks.

Once I did get a warm introduction from the CIO of one of the world's most famous companies, very successful, and famous for a lot of use of technology. As far as I could tell, the warm introduction was, for the VC, just a throwaway. A waste for the CIO, the VC, and me. Bummer.

Really, an introduction is the VC having others do part of the VCs work, and this should not be justified: E.g., some of the standard advice is to write a very short, general pitch deck, with only a few foils and only a few words per foil, with the only purpose being to get the VC interested enough to ask for more information. Well, if this is the purpose of the first contact, no way should I bother the president of a high end university or the CIO of a top company; instead, the VC can just glance at a few foils and words in a PDF file, type "Sounds good. I'm interested. Please send more." and hit Reply.

To be more clear on what VCs are not responding to, my project is to get the world's best solution, much better than anything else, for a problem that is pressing for nearly all users of the Internet, in the US and around the world. So, some back of the envelope arithmetic is

     5 ads per Web page

     10 pages per usage

     $2 per 1000 ads displayed

     2 * 10**9 usages per week

     52 weeks a year

     5 * 10 * 2 * 2 * 10**9 * 52 / 
     1000 =  10,400,000,000

dollars of revenue per year.

Status: Production quality software -- from carefully designed, highly scalable software and server farm architecture -- written and running with no known problems, currently in alpha test.

All that information above has been essentially ignored by essentially every well known VC firm in Silicon Valley.

So, if that doesn't work, what does?

Well, about all that is left is what is still promising but nearly never in the advice. So, here is what is left:

Go ahead with the business. Go live. Get publicity, users, and revenue. Have significant traction growing rapidly. Wait for the VCs to contact you.

Of course, I'm a solo founder, CEO, CTO, CIO, Software VP, all of the development team, Server Farm and Network VP, ..., janitor. So, by the time my company has traction significant and growing rapidly, if the project will work at all, then soon it should have plenty of revenue for rapid growth. If the growth happens, then there will be plenty of after tax earnings to make me financially successful. That is, the cost for me to run the server farm will fall quicly to less than 1% of revenue with 99+% of the revenue pre-tax earnings.

One server from less than $1000 in parts should have the capacity to generate $200,000+ a month in revenue. For a solo founder, why then take equity funding?

By the way, it's all safe for work, legal, ethical, squeaky clean, etc.

Still, essentially no one on Sand Hill Road gives a sh_t.

Okay: They have their ways of making money, and I have mine. Apparently we have nothing in common.

Lesson: I no longer place much value on advice for how to contact VCs. Or, if they are at all interested, then they will contact you.

If there is a mob of them on the front lawn waving stacks of $1000 dollar bills at you and screaming for you to take the money, then maybe open the door and otherwise call the police to have them run out of the neighborhood!

That is, if you are a solo founder, then by the time they want you, you won't want them.

So, what ARE the VCs looking for? How about young, naive founders, traction significant and growing rapidly, no earnings, five founders, all credit cards maxed out, each founder with a pregnant wife, and eager to sign any term sheet.

If you don't have users, you don't have a company. My guess is, that's why they are rejecting you.

Or your $10bn/year metric is non-sense. I see 0 ads per session because I use an ad blocker.

What exactly is the pressing problem you're solving?

> If you don't have users, you don't have a company.

Right. But it's tough to find any such statement on the Web site of a seed or series A VC.

If they want me to have users, then they want me to have revenue. For that I need to get my first server built, running, and live on the Internet. And once I have that, I can just get the publicity and mostly otherwise see if people like the site without any equity funding.

If the users do like the site and the usage grows, by the time that first server is fully busy, I will have ballpark $200,000 a month in revenue with less than 1% of that as expenses and 99+% of it as pre-tax earnings. Then since I'm a solo founder and 100% owner, why should I consider equity funding?

Or, by the time they want to write me a check, I won't need it.

> Or your $10bn/year metric is non-sense.

Not at all. Planning is important, and that's how the planning works out. Sure, there is the assumption that people like the site. But the site itself is not much of a question since the software is essentially ready for quite serious production.

If the VCs want to wait until the $10 billion is much easier to see, fine for them. Then they can offer to write me a series A check for $5 million for 1/3rd of my company? Gee, thanks, guys, your $5 million is about 5 hours of my revenue, nearly all of which is pre-tax earnings.

> I see 0 ads per session because I use an ad blocker.

If that gets to be a problem, then I will send the ads from my server and not have my Web pages get the ads from ad servers; besides part of my work is some unique and especially effective ad targeting where it will be easier for me just to send the ads from my server farm; ad blockers will, then, have to tell the difference between Web page images that are ads and ones that are content, both coming from the same domain name. Lot's of luck, there, guys!

> What exactly is the pressing problem you're solving?

I told the VCs. None of them gave a sh_t.

My intention here is not to pitch VCs. Instead, I'm just trying to give other entrepreneurs the benefit of the painful, wasteful lessons I learned: In shortest terms, just pick a project you can do from your own checkbook, build that business, wait for the VCs to call you, and, then, see if you are still willing to accept their check. Likely you won't be.

First off, I think you generated a lot of goodwill on HN with your previous technical answers such as your generous explanation of FedEx logistics.

With that thank-you out of the way, please take the following as constructive critique that's based only on the text as you wrote it rather than you as a person. When I read the following excerpt that you use when you discuss VCs here and other threads...

>the world's best solution, much better than anything else, for a problem that is pressing for nearly all users of the Internet,

>[...]

>So, what ARE the VCs looking for? How about [...] , each founder with a pregnant wife

... in the first part, it sounds like a "blowhard"[1] in the literal meaning of that word. The second part with caricatures is indicative of bitterness. Both attributes are radioactive to investors -- especially when there is no impressive revenue to offset the (perceived) unpleasant personality.

Like I said, maybe IRL you're such a inspiring and engaging businessman that any VC would love to spend 84+ board meetings with you. (7 years times 12 monthly meetings). Unfortunately, the tone of your writing gives off a different vibe.

[1]https://www.google.com/search?q=blowhard

Thanks.

For my

>the world's best solution, much better than anything else, for a problem that is pressing for nearly all users of the Internet,

Well, that's what I intend. I know quite a lot about the field, area, space, market I'm in, and, of course, my work, and so far that statement appears correct.

That statement is supposed to be a simple, clear, accurate statement about reality as best I or anyone can see it now.

One way to evaluate that statement is just to wait. If the statement is correct, then I should have a company worth several hundred billion dollars, but then VC funding would be absurd. Maybe KKR or GS could arrange an M&A, maybe the largest ever. Or there could be one heck of an IPO.

In the meanwhile, we have to make estimates.

If a VC doubts that statement, then it's time for them to ask questions. But a solid answer won't be short so wasn't in the initial contacts I made.

But an initial contact is not supposed to have lots of detail but just be a start of a conversation, mostly to answer the questions the VCs have. There never was even a start on such a conversation.

Gee, sometimes big things do happen: E.g., the guy who first saw a good, cheap, practical way to make pure aluminum from the ore had to know he was onto something really big, and he was, and should have said so.

Full support would take some explanation about metals, strength of materials, corrosion, airplanes, fabrication, etc. so would not be short.

My statement, "blowhard" or not, touches on a central point for Sand Hill Road: The only way they pay the rent, make money, and make LPs happy is grand slam home runs, that is, the really exceptional successes. So, the VCs are forced to be interested essentially only in the exceptional. So, it should be appropriate to discuss the exceptional, "blowhard" or not.

If the VCs believe that the project would look better limited to only 1 million target users, then there should be a way to arrange that! Is that really the concern of the VCs who ignore my e-mail and foil decks?

For why the VCs ignore my "blowhard" statement, my best guess is that the VCs are totally convinced, down to the center of the cells at the center of their bone marrow, that there is no way, none, zip, zilch, and zero, for any human alive, given that Einstein is not, ever early on to predict a major success. Instead, all anyone can do is look at early traction and otherwise just hope for good luck. So, discussing anything exceptional, actually successful as desired, is just counting on luck and, thus, absurd.

My reaction, sometimes included in what I sent VCs, is that there is a long history of projects done by the US DoD where from the beginning, maybe just on the back of an envelope, the goal was something exceptional, the project passed good peer-review, technical evaluation early on, and the results were as intended, on time, on budget, or nearly so. Examples: The B-29, designed essentially just to fly between Guam and Japan (IIRC, ballpark $6 billion). The Manhattan Project. The B-52 (with updates, still flying). The Boeing 707 -- quickly put the passenger steamships out of business. The nuclear submarines. The missile firing nuclear submarines. The SR-71. GPS. The F-117 stealth fighters that flew over Baghdad in Gulf War I. I started my career in US DoD work around DC and saw such things.

My Ph.D. dissertation? I cooked it up on an airplane flight with a summary on one page. It worked just as planned -- the math, the software, the solution to the real problem.

For my

> So, what ARE the VCs looking for?

Sure, since I tried all the advice and everything else I could think of, that is just the crucial remaining question. My guess at an answer is what explained and what I'm trying to contribute here.

My remark about the pregnant wives, etc. was to exaggerate to make what appears to be an important point: VCs want dependent entrepreneurs. Or, the relationship between the founders and the VCs is a power struggle where the more power one has, the more money they end up with.

> The second part with caricatures is indicative of bitterness.

Not "bitterness" -- I'm not pissed. "This is away beyond pissed." I got a lot of advice; read lots of VC Web sites on what they wanted; it was all a huge waste of time.

> Both attributes are radioactive to investors

Some of what I sent some VCs had something like

>the world's best solution, much better than anything else, for a problem that is pressing for nearly all users of the Internet,

but not all. Whether such was included or not made no difference.

In what I sent, there was no indication of "bitterness".

> when there is no impressive revenue

And THAT'S my core point: What the VCs are looking for is traction, better still, revenue, better still, impressive revenue with an impressive growth rate, better still, earnings, then impressive earnings.

Fine. That's what I'm looking for, too. And when I get there, I won't need their equity funding and won't want their equity funding because I won't want what is in their term sheet and won't want to report to a BoD.

Apparently this was the same for the founder of Plenty of Fish -- IIRC, he remained sole owner and finally sold out for about $550 million. No VCs involved.

I've got 100,000 lines of typing for my software, all running, and apparently enough for going live and getting to nice earnings. That and the rest of the work and planning look, in expected value given the features of the project, valuable to me.

Okay, but now we are getting somewhere, starting to understand: Even for a seed round, they want traction. Okay, that's their way of doing business.

I wish, very much wish, I'd just the heck actually KNOWN that. I would have saved a LOT of time.

Apparently there are plenty of deals for VCs to make their way. And occasionally Lady Luck smiles and they get a big win, one that makes the LPs happy.

But for me, as a solo founder, by the time they want to write me a check, I will no longer want, need, or be willing to accept it.

That's the lesson I came to and here am trying to suggest to other entrepreneurs on HN.

> Unfortunately, the tone of your writing gives off a different vibe.

Of course, here, it does. But this is not intended to be a pitch to a VC, and what I sent them, in several hundred e-mail messages, had nothing objectionable, offensive, etc.

Or, the VCs want traction. Everything else and a dime won't cover a 10 cent cup of coffee.

Exercise: Find such a statement on a seed and/or series A VC Web site.

Now we are getting clear on reality.

I completely commiserate with you. It is hard to have a good idea and not be able to get it attention. However, after trying to actually pitch an idea in person, I learned that I wasn't nearly as prepared as I thought I was. Seeing your product through the eyes of someone who is not emotionally invested in it (or you), and whose job (or money) depends on vetting you and your product, is very enlightening (and a bit heartbreaking).

As for the clarification on your idea, this audience (and investors) would expect to see much more than that. After reading what you wrote, all I can tell is that it's related to online advertising, but I'm not clear on what specific problem you're addressing, how your product will make money, or how your product will compete and gain marketshare in a crowded market of entrenched (and capital-rich) competitors.

I say this with the intention of being helpful, not to tear you down. And I'm just a guy who reads HN, not an insider of anything.

Thanks.

> However, after trying to actually pitch an idea in person, I learned that I wasn't nearly as prepared as I thought I was.

After several hundred e-mail messages sent, I never pitched a VC. But I've done lots of successful pitches elsewhere, academics, technical work, in business. As an undergrad math major, I got Kelley, 'General Topology', read it, and gave lectures to a prof -- so, I had practice lecturing. I've done lots of college and grad school teaching. E.g., in a software house, I corrected some engineers of our customer, found what they really needed in power spectral estimation, pitched it, and converted the competitive bid situation to sole source. E.g., I passed my oral dissertation defense for my Ph.D. For a Ph.D. qualifying exam, I took an oral and got a High Pass. Once I gave a talk in AI and got a big room of people all excited and, then, invited to give more pitches. I presented an AI paper at a Stanford AAAI IAAI conference -- seemed to go well enough.

So, my presentation abilities should be good enough for VCs.

> As for the clarification on your idea, this audience (and investors) would expect to see much more than that.

Here I was just being really short, just to say that it's not supposed to be a trivial project, just for here. Actually, I rarely mentioned all that arithmetic and, instead, kept things qualitative. All the e-mail messages and foil decks I sent had more on the nature of the project.

In part I omitted that stuff here because I'm just commenting on the subject of contacting VCs and not trying to pitch any VC readers of HN. I'm not including a sample VC pitch here. I'm not trying to use HN to pitch VCs.

As I mentioned, some of the advice I got was to keep the number of foils to a few and have only a few words per foil and use the pitch deck just as a way to get past the VC's first filter and have them ask for more. Okay, I did that, lots of times. Didn't work at all well.

Other times I wrote much more, as foils, just as e-mail, as both, etc. No difference.

> After reading what you wrote, all I can tell is that it's related to online advertising, but I'm not clear on what specific problem you're addressing, how your product will make money, or how your product will compete and gain marketshare in a crowded market of entrenched (and capital-rich) competitors.

Right. In what I sent the VCs, I always covered much of what you mentioned. Some of what you mentioned seemed too difficult -- e.g., competition -- to cover at all well, without raising more questions than I was answering, so I left it for later. Their wasn't any "later".

Again, my post here wasn't like any of my pitch decks or e-mail descriptions. I told the VCs from more, say, in 6-8 foils, to a lot more -- made no difference.

> I say this with the intention of being helpful, not to tear you down. And I'm just a guy who reads HN, not an insider of anything.

Yes. Thanks. And here I'm just trying to get back to some reality on how VCs react to e-mail, foil decks, and introductions.

In particular I suggest that entrepreneurs basically ignore all the advice on how to contact VCs and especially ignore all the stuff on VC Web sites and, instead, look for what the heck the VCs really want. For what they really want, I gave my best guess.

Or more simply, I don't think that the VCs give even a weak little hollow hoot about anything but, to boil it down to one word, traction, significant and growing rapidly. For the rest -- founder's background, team, technology, code architecture, code, intellectual property, scalability, barriers against competitors -- they don't care. Size of the market? If it's small, then the VCs will have M&A exit in mind. If large, IPO exit dreams in mind. For first funding, they don't care.

Net, I wasted a LOT of time trying the advice on how to contact VCs, the best ideas I could think of, tried darned near everything -- just a total waste of time. Hence, here I'm suggesting that other entrepreneurs don't do that.

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