VCs are liars. And so am I.
acrowdedspace.com
acrowdedspace.com
I'd love to hear you tell me "I just don't think you have what it takes," as that's just going to pour fuel on my fire and motivate me to work that much harder just to spite you.
I love negative feedback like that... fuck all ya'll, because when I'm running a billion dollar company and rocking up to your shitty office in my Maserati to ask "how's it going?" I'll be laughing to myself at how pathetic and stupid you were to doubt me.
What does the other side gain from telling you the truth and burning bridges like this? Best to give a vague, non-committal reason so there's always a chance they can talk with you again in the future.
Investors (to take one example) are fallible and scared. They're driven by fear, and by greed - fear that they might miss out on the next facebook (it'll go on their public record, usually, because of what you're proposing), and greed at the upsides are if they can get in before others on the next facebook.
Notice I didn't say "before anyone else." That's best, but barring that, you want to be able to get in later because you have a good relationship with the founder. And touchy founders that would be vindictive about being rejected are tough to keep a good relationship with, and most entrepreneurs are emotionally heavily invested in their own startup so it's easy to be touchy and vindictive, so it's "best" as an investor to not upset anyone.
"best" is in quotes because this is a trend that might slowly be changing, in large part because of the pressure from groups like YC.
Best to give a vague, non-committal reason so there's always a chance they can talk with you again in the future.
I'd talk to the OP again, after I make it bigtime and roll up in the Maserati, with a 6' tall, red-headed supermodel with a Scottish accent on my arm... and I'd say "fuck you, dude" and then buy a round of beers and sit back and laugh about the whole thing.
Of course, that's just me... :-)
http://www.quora.com/How-can-I-go-about-acquiring-a-worthy-o...
Need a nemesis or arch-rival? Here ya go... Quora on how to find one. :-)
For a lot of us, and I can't speak for you, recognition of our effort is much more important than money. What totally aggravates me about this guy is that he thinks he's qualified to attack people who have done much more than he ever has, based solely on what he perceives as their ability to drive a business. And he has this luxury because he sucked someone's dick or was born to a rich old doctor somewhere, or both. And people who've worked hard to make things are supposed to listen to this bullshit. That's what pisses me off.
Sure; he writes and thinks like a kid. Let me ignore him!
He might be a professional success but based on this sample size, yeah, writes and thinks like a cocky 13yo until proven otherwise. No offense intended to anyone, of course.
Maybe it was satire.
Doesn't mean I act like a cock about it.
Your comment (although you're not the poster in question) kind of demonstrates the problem facing the VC author of the article.
Especially people who write like a cocky 13 year old.
N.B. This is far from my first account. Also, bringing out the 'tenure' argument is pretty old/lame. I was seeing that crap on Usenet and EFNet over a decade ago. Grow up.
People are accountable for what they do and say regardless of their track-record.
P.S. What makes it even funnier is that he's a consultant and he's only living up to the stereotype of greedy consultants. Outrageously comical.
I'm not much of a Rand guy, but I think Roark's response is the best: "But I don’t think of you."
Of course I'm being partially facetious here. The point is to take negative feedback as a challenge and use it as motivation.
I'm not much of a Rand guy, but I think Roark's response is the best: "But I don’t think of you."
Yeah, ya know, I was just watching The Fountainhead again last week and that scene really jumped out at me. I do admire that outlook, but I also find value in choosing to use doubters doubts as motivation. I know it seems contradictory but it works for me.
It gives me incredibly important data. I always reflect on past decisions, good and bad. It helps minimize the bad ones and maximize the good ones.
I received the introduction to one of our best investments from a CEO we said no to. Do you think that CEO would have made the introduction if I had told him he doesn't have what it takes to be a founder at a VC backed startup?
Maybe, who's to say?
How many times a day do you think successful startup founders say "no"?
A lot.
Learn to be successful. Say no and learn to accept no.
It's surprising how dishonesty permeates the financial services industries (of which venture capital is one).
This only works if you're in a white MC Stradale with gunmetal wheels.
;)
Only real friends will tell you "you suck": so step 1 - get some friends.
It just goes to show how much investment is based on vague impressions. For example, why shouldn't a founder get frustrated with fund-raising, or be desperate for funding, it's not a reflection on the business idea or feasibility.
This tells me everything I need to know about this ass monkey.
>people that are past the age of 50 and are trying to start a mobile, local, social startup but really are not capable
Not "all people past the age of 50 -are- incapable", just people who are so incapable they don't recognize the credibility they lack due to external influential but not necessarily exclusive factors like their age, background, and appearance. I think all of us could rattle off a list of 50+ year old "geezers" that could pull something like this off, but the reality is that many of them can barely use a cell phone. If your presentation doesn't include measures to address that assumed, pre-programmed credibility gap, which often means just talking about things in a way that demonstrates you know what you are talking about and actually can navigate around Android, then you likely don't (yet) have the realism or the drive necessary to make something go.
The 50+ remark is just a way to say "This guy looks like he can barely use Outlook", or "This guy is out of touch". Perhaps not the most well-considered illustration, but I think we can get the OP's point without throwing a politically correct hissy-fit.
What a load of crap. A 50 year old today could easily have been a 20 year old AI programmer in 1980, and he probably knows more about technology than the rest of us put together. Computers aren't actually that new, ya know, and are not the exclusive domain of the GenY kids.
I mean, for crying out loud, COBOL first appeared in 1959, LISP in 1958, FORTRAN in 1957, and ALGOL in 1960. There are folks around who have been programming longer than most HN readers have been alive.
There are technically literate and technically illiterate people of all ages, the 50+ thing is pretty much bullshit as any sort of generalization.
I don't have any hard data, but I can say, anecdotally, most 50+ are not "techies" and they don't know their way around a computer system. I believe this belief is rather common.
I think some 50+ year olds would make exceptional startup founders. However, an older person who may be founding a "social, local, mobile" startup because he's looking for a career change is going to have a credibility gap because of the general impression that older people are not technically minded. If the pitcher doesn't have a strong compsci background or history to counteract that notion, he'll have to make up for it in the presentation.
We are all free to pontificate on whether this is a fair generalization or not, but I think it is clearly that it is commonly held and something an older founder will have to face and address if he wants to succeed.
OK, that might actually be a fair point, if you're talking about the population of 50+ people at large. But in the context of "people founding tech startups," my guess would be that pretty much any "50+ tech startup founder" probably is a techie, or is at least pretty tech savvy.
Now if you had J. Random 50+ guy who had spent his entire career as a tobacco company accountant and he suddenly showed up saying he was founding "The Next Instagram," then maybe there would be some reason to go "hmmm... wait a minute." But, honestly, I think you could subtract the "50+" part of that and the point would be exactly the same. Would it matter if J. Random 25 year old tobacco company accountant showed up and said "I'm founding The Next Instagram?" Wouldn't the reason for the skepticism be the individual's background and experiences, and not their age?
We are all free to pontificate on whether this is a fair generalization or not, but I think it is clearly that it is commonly held and something an older founder will have to face and address if he wants to succeed.
Probably, but I wouldn't want to be in the business of helping perpetuate this kind of ageism.
I think this is ultimately true. Whether the bias is justified or not, the best founders will be aware of it and work to make up for it. The same could be said for bias against women in technology, for example.
That being said, I still believe this bias is wrong, and am concerned that this VC so publicly shared it, because to me, his publicly sharing it indicates that he's not even aware there's anything wrong with it. I do not believe a 50 year-old should have to work any harder than a 24 year-old in proving that they have what it takes to run a social startup.
To the author: I'd definitely want the blunt, unvarnished and harsh truth. No joke! The only way to get better is to get the truthful opinion of people that matter.
For this comment, all down-votes will be considered up-votes :-)
I've done that before - and it is one of the things I most regret. I ended a friendship because of that kind of mistake and swore to myself I'd never do that again.
After all, if I do that I'm exactly the kind of person I despise. How can I seek to improve myself if I won't listen when I might get butt-hurt from the words I hear?
> Even the statement of your enthusiasm for the unvarnished truth is a veiled threat...
I'm not sure how you figure that. It is actual enthusiasm, don't confuse it.
Also, this doesn't have anything to do with VC's per se. It happens in Private Equity, Fixed Income, Credit, Public Equities ...
* smart/knowledgable are used here loosely to encompass the wide range of reasons why a VC might judge an idea poorlyAt first, I took it as le insult. An insult against my mad pr0grammer skills.
In hindsight, I look at it as: my technology may have been OK, but it wasn't astounding enough to qualify as a revolution in the area and lead a big stampede to my door. It was a harder problem area (NLP). Something simpler with the same amount of persistence and execution may have led to much greater results.
In hindsight I appreciate the honesty. They saw it before I did.
The challenge is, people aren't ready to hear certain things until they're ready to hear it.
Probably, OP should have mentioned different pointers, but still I think that such comments are missing an important point of this post by Josh - honest feedback almost never works.
I have managed up to 30 people, [colleagues and HQ people not counting] - 95% of the time honest feedback does not work, mostly because of the:
- ego, or
- hidden agenda
5% it worked with people, with whom I had working relationships, based on mutual trust AND they were all GetDone high performing individuals.
So what do you do when you know that honest feedback will not work?
Are you going to hit a brick wall with your head?
No... you come up with some nice words, etc.
You can like such people, value them, but if you feel that they can not accept your honest feedback, you don't give it.
That is what ticks people off about VC's.
There is nothing productive about "you're incapable, just give up" or "you're incapable, go deal with someone who gives people less money first and see if that gives you some capability". These are all deflections of the real problem. Why not try "We were concerned that you appeared nervous when asked how your site would handle potential copyright issues" instead of "you just can't do it"?
I disagree. For some people, hard as it is to take, this is exactly the right advice. Some people simply aren't cut out for what they're trying to do, and changing tack sooner rather than later is the optimal course of action. Any advice which precipitates that decision is therefore good advice, no matter how hurtful it might be to receive.
As the OP said, just saying, "You'll never make it, just give up" is very unlikely to yield positive results. So even if you think the founder really will never make it, why is that an important criticism to share? They may surprise you if you actually provide helpful criticism on action points where real progress can occur. "Stop being you" is, of course, not actionable.
That's why we have lawyers; that's why artists have agents. People who don't care one way or the other and for whom nothing's ever personal.
Entrepreneurs need professional pitchers -- agents who would be able to gather honest feedback and tell it like it is.
You always say the team is important. I couldn't agree with you more.
The Team is important not only in the startup, but also in the group of people that make up your investors. Thus, given that we've decided your team is not strong enough to be investors in our company we're going to pass.
In the future, it might be wise to hire partners who are not biased based on age, or prone to making decisions based on irrational conjecture (such as a presenter in an important meeting being nervous.) Also, be aware that one of the signs that a VC firm is not going to be a reliable partner is a pattern of cargo-cult investing. Just because Instagram just got sold for $1B does not mean you should be investing in every social-mobile-location-picture sharing startup (not run by anyone over 50, of course!) The best opportunities, by definition, are the ones with a novel approach.
Thank you for your time, and if you should have a major turnover in partners, feel free to contact us again in the future.
Signed-
Startup Founder
For VCs to make money, they need to have as many founders like them, so they lie .. exactly because of responses like this. It does the VCs more harm to be honest with what they think[1], because it pisses off the founders.
[1] Sure they could be wrong about you (by passing on you), but nobody claims to be perfect. If you're just unable to accept rejection, then well, there's your first problem.
If these are the reasons VCs choose not to invest in companies, then the reason VCs lie is because their reasoning is bullshit, and they don't want to get called out on it.
2. I'm sorry, but your response isn't even relevant to my response. I wasn't commenting on the VCs interviewing skills at all. I was commenting on nirvana's response.
3. This is the real world. In a perfect world, every candidate would be interviewed by the world's best interviewer that can see past all our weakness and only see all your strength (interviewees would want that, no?) Unfortunately, you work with what you have - not with what you wish you had.
Cheers.
2. You said we should give credit for the OP giving feedback, and that VCs lie because they don't like getting snarky responses. I am arguing that a) this response is deserving of a response like nirvana's because it reveals that VCs make judgments based on unquestioned biases and irrelevant details, and b) VCs don't give feedback because it would reveal that their processes are biased and based on irrelevant details.
3. Good candidates do not want interviewers who look past all their flaws, and that's not what I was trying to say. Good candidates want relevant feedback. "You're too old to do this job" is not relevant feedback. "You don't understand $x well enough to do this job" is great feedback.
Also, in the real world, there's bias and it sucks, and great candidates/founders will be aware of this, and work to combat it. That doesn't mean I'm going to throw up my hands and give up on trying to eliminate bias.
The essay jumps straight from interview behavior to a decision to not fund, leaving the reader to work out what is the assumption. There is simply no other reason the VC would consider such behavior important.
This would indicate that VCs, on average, make poor judgement on the quality of their investments. The use of arbitrary indicators and qualitative characteristics as a primary decision factor for who they invest in or not would seem to be contributory to their overall poor performance. Perhaps VCs should learn to resist their early (and probably incorrect) assumptions about entrepreneurs based on age, nervousness, or other factors and instead look to the underlying premise of the business and existing capabilities of the management team. Or at least they should realize that they are not particularly good evaluators of those characteristics, based on their past performance, and factor that in accordingly.
[1] http://www.kauffman.org/newsroom/institutional-limited-partn...
Would you? If you've heard that a lot, you probably won't. There's nothing wrong per se - the person could be right, but it's more likely that he is wrong[1]. But something could be said about this person's approach to finding a co-founder, i.e. if he's going about his co-founder search this way, he's probably doing other more serious mistakes other battle-hardened entrepreneurs have learned the hard way.
It's a mental decision-making shortcut. Don't get hung up over little things such as the OP's actual words, like the way the interviewee answers a questions, fidgets, etc. It's just a mental shortcut signal. Sure the OP could be wrong. But he could also be right. How do you know you're not wrong? VCs take a million meetings, make a million decisions, they have LOTS of data to test how well they're doing. They are not random schmucks. Clearly they think about this day and night. Is it possible that they're all wrong and you're right?
Also - I'm not in VC so I can't comment from a position of being an insider, but consider this: if you were a stock trader with an uber stock trading algorithm, would you share it? No. I don't see why VCs would share their "algorithm" either. They're competing with the other VCs for deals in startups, and they each have their secret sauce. They also compete with each other for more investor money (from their LPs).
Lastly, consider this: would any anti-spam vendor fully disclose all their algorithms to detect spam? No, that would be dumb, because then spammers would know exactly how to circumvent them.
[1] Fact: most startups fail
Unless maybe the VC is in irrational human being who has biases just like everyone else.
Unless they've actually done studies on whether fidgeting is a good indication of company performance, this statement is ludicrous.
There is a difference between intent to be rational and actually making good decisions, and they don't have to go together.
If I were to overly simplify, the summary of the OP Post is: "We reserve the right to lie, because we feel you can't handle the truth"
And many entrepreneurs respond: "If you can't feel fit to tell me the truth, then we don't have a relationship based on trust. And that means, there is no relationship."
If the OP's opinion is honest and forthright (ironic given that it is asserting a right to lie), then the entrepreneur's response is just as justified in being honest and forthright (we reserve the right to not work with liars).
If the desire to lie on the part of the VC is simply to avoid the pain of dealing with upset enterpreneurs or the potential of burning bridges, then they need to accept that they may offend other entrepreneurs who more value honesty over lying for the sake of avoiding hurt feelings.
"Thus, given that we've decided your team is not strong enough to be investors in our company we're going to pass." <-- well if the VC's team is not strong enough to be investors, why were you pitching them for money in the first place? Seems to me like if you'd pitching them, then clearly you thought they were good, because you're trying to get something out of them. Therefore, a "you're not good enough for us anyway" response reminds me of the story of the fox and the sour grapes[1].
Perhaps also a difference in perspective, Josh suggested a solution at the end of the post - so to me, it's not justifying lying as it is merely stating that something is broken, and here are some steps to take a stab at solving the problem.
The reverse rejection does not work in this case.
In those scenarios where a startup is being pursued rather than pursuing, I doubt VCs will spend as much time lying as they will trying to make themselves the darling to partner with. If you keep in mind that VCs are situational liars, then you can separate the mercenary deal-chasers from the real value-added partners. That is, the ones that treasure openness and honesty are to be favored over those that lie out of convenience or cowardliness (and freely admit to doing so).
If it was the other way around, you have tons of traction and investors are waiting out the door to invest then you might be able to say that. But in the end, I feel like it still does no good.
Of course, you're also right - I don't think this guy is a very effective VC at this point. Some of his points seemed completely disconnected. But a person hand-waving or getting nervous on an important topic is a great flag to look for, don't you think?
I was writing a long post about how we think we're really good at detecting "important signals" like if someone's lying, but that we're actually terrible at it. But the new yorker article that was frontpaging yesterday should pretty much explain it, even though Jonah Lehrer is a bit smug for my tastes ;)
TL;DR- the OP sounds like a very shallow-thinking VC who's blissfully unaware of his own biases. It might work out ok for him -- these biases usually work most of the time, and that's why we have them -- but it will probably fail in some very crucial instances where a more thorough, data-driven approach might have worked better. In fact, that may be precisely how the great VC's are differentiated from the merely ok, but that's a different story...
(link: http://www.newyorker.com/online/blogs/frontal-cortex/2012/06...)
BTW, shallow thought wasn't meant as a derogative. It's what we monkeys do best, after all. It'll result in a different profile of swings, hits, & misses than other approaches, that's all.
(also, the irony that the new yorker article also suggests how we're really good at seeing the faults in others thought processes but not in our own is hi-larious)
Best of luck!
My sense is that most wannabe entrepreneurs do not have these qualities. And without these qualities, it will be difficult to succeed even with a world-class idea, or with all the money in the world, or even with great intelligence and capability.
The helpful words from you, then, would be the ones that change the would-be entrepreneur into an incessant creator.
Let us assume that such words exist, and that the supplicant (and I use that word advisedly) implements them. I reckon it would take a year (or possibly less) to demonstrate that a sustained change has occurred, thanks to those words.
The question arises, of course: do such words exist, and if so, what are they?
Note that if you discover these words, then they will be worth, literally, many billions of dollars.
Think big. Start small. Iterate often. If you aren't failing, you aren't learning (or trying).
Money from customers beats money from investors. See if you can get that. And if you can't, find another metric for success.
More often than not we get in our own way. This is not something that you can consciously change, even if you are aware of it. There are several kinds of beliefs, and some of them are ingrained deep-down inside of you. We often make the mistake of thinking that our minds are like machines, which can be constructed in different ways - but minds are more like life - growing, changing, in lots of ways.
So the words must be seeds. It is easy to describe the outcome that you want, but very hard to construct a seed that will get the person there. So difficult, in fact, that it may not exist, or if it does it may take years to grow.
Learn to meditate. Learn to accept reality for what it is, learn to stop fighting reality. Learn to accept yourself and love and laugh and work with a vigor that you've only barely tapped.
Are angels more or less likely to follow the heard or be arbitrary? (EG: he's nervous while pitching us therefore, he must be hiding something)
Since Angels these days have rather large amounts of funds, and the cost of running a company is much smaller -- I believe we'll be able to service up to 200 million customers for about $300/month operating costs excluding salaries which nobody is taking right now.
Do we really even need to deal with VCs anymore?
Why not take a series of Angel investments? Seems many companies could be done in three:
$100k: Seed stage
$100-$500k: Have product/market fit and getting traction.
$500k-$2M: Profitable and want to spend heavily on marketing and growing the team.
Seems like those rounds should be sufficient for a lot of companies, like say Instagram. And they're small enough to be handled by a syndicate of angels. And if the company is of the type that it then needs to raise $5M-$15M for further growth, at that stage you could probably get VCs in on much more reasonable terms.
I would strongly recommend bootstrapping if possible but that is not feasible for many cases. Some people conflate the "<well-known startup> for <noun> website" startups with the actual technology startups. If your startup requires shipping a 100k lines of novel and bulletproof code, you are not going to be doing it for less than a couple million bucks. Software development of the purest kind is expensive but it also produces much of the interesting value.