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Speak softly and carry a big stick. VCs constantly talk about supporting entrepreneurs through tough times, enabling creativity, building amazing companies, et

Speak softly and carry a big stick. VCs constantly talk about supporting entrepreneurs through tough times, enabling creativity, building amazing companies, etc. They're not lying -- they really believe it, and it's an important thing for them to believe. But while they say all this stuff, they're also human. And humans follow their incentives. They do that before they do anything else. So your job is to make it easy for them to act ethically. That means talk the talk -- you want to build a great product, scale it to an amazing company, hire a great team, etc. That's the only thing you care about. Building a great company that builds amazing products and makes everyone lots of money. But act game theory. Have lots of great alternatives to negotiated agreements with any given VC. Put yourself in a powerful position where you can get favorable terms. Don't give up power/equity on the assumption that "it doesn't matter", or that they'll act magnanimously, or anything like that. It's way, way easier to have a lovely relationship with people when you're in a position of power. Put yourself into that position. (There are some investors you can unequivocally trust to act their talk -- notably YC, winfunding, and a few others, but don't rely on that as a general rule)

greenspot 8y ago
This. So true and extremely well framed. The only thing I can add: At the beginning of a relationship, everybody is kind. Background checks not just help, they are essential, do them. Getting into conflicts and power plays with VCs, or just any person at some point, should be expected but there are still huge differences in how people deal in messy situations in terms of morale and ethics. You will find everything between feeling uneasy and facing a nuclear war.
- wiz21c 8y ago
  >>> there are still huge differences in how people deal in messy situations in terms of morale and ethics. so true. Problem is that in my small business experience, those in power are there because they have very flexible views on morale and ethics (i.e. they think they have morale/ethics, but they actually forget it when their company is at stakes). Being the ethical guy I'm of course totally biased. But the parent post is so right : having ethics/morale can be extremely damaging for you because you'll have to work with people who absolutely don't get how you think and that'll be super exhausting. Know yourself before going into that game.
edshiro 8y ago
Great advice. I am not seeking investment yet but this is definitely something I may have to do in the future if I want to accelerate growth for instance. After a few unsuccessful attempts working as employee in startups, I have decided to build my own. Over time and through multiple setbacks I have learned more about myself and what I want when it comes to the type of company I am building. To me it's very important for my co-founder and I to have control over the destiny of our company. Getting VC money can shift the balance of power and you could lose control over what you have built, which is not ideal. For instance VCs could block an exit opportunity which could result in life changing money for you because the return they get is below their expectations. This may sound very naive, and I don't claim to understand your circumstances, but make sure you already have a strong, growing business so that you play a strong, iron-clad hand when discussing funding with VCs. All the best my friend.
AriaMinaei 8y ago
Eloquently put! Can you recommend books/articles that'd go along with this advice?
- coffeemug 8y ago
  The Art of Strategy[1] is a good layperson level game theory book that will put you in the right mindset. It's not about fundraising at all, but that doesn't matter -- it's the mindset that's important IMO. [1] https://www.amazon.com/Art-Strategy-Theorists-Success-Business-ebook/dp/B001FA0NOM/ https://www.amazon.com/Art-Strategy-Theorists-Success-Busine...
  - AriaMinaei 8y ago
    Many thanks :)

greenspot 8y ago

This. So true and extremely well framed. The only thing I can add: At the beginning of a relationship, everybody is kind. Background checks not just help, they are essential, do them. Getting into conflicts and power plays with VCs, or just any person at some point, should be expected but there are still huge differences in how people deal in messy situations in terms of morale and ethics. You will find everything between feeling uneasy and facing a nuclear war.

wiz21c 8y ago
>>> there are still huge differences in how people deal in messy situations in terms of morale and ethics. so true. Problem is that in my small business experience, those in power are there because they have very flexible views on morale and ethics (i.e. they think they have morale/ethics, but they actually forget it when their company is at stakes). Being the ethical guy I'm of course totally biased. But the parent post is so right : having ethics/morale can be extremely damaging for you because you'll have to work with people who absolutely don't get how you think and that'll be super exhausting. Know yourself before going into that game.

edshiro 8y ago

Great advice. I am not seeking investment yet but this is definitely something I may have to do in the future if I want to accelerate growth for instance. After a few unsuccessful attempts working as employee in startups, I have decided to build my own. Over time and through multiple setbacks I have learned more about myself and what I want when it comes to the type of company I am building. To me it's very important for my co-founder and I to have control over the destiny of our company. Getting VC money can shift the balance of power and you could lose control over what you have built, which is not ideal. For instance VCs could block an exit opportunity which could result in life changing money for you because the return they get is below their expectations. This may sound very naive, and I don't claim to understand your circumstances, but make sure you already have a strong, growing business so that you play a strong, iron-clad hand when discussing funding with VCs. All the best my friend.

AriaMinaei 8y ago

Eloquently put! Can you recommend books/articles that'd go along with this advice?

coffeemug 8y ago
The Art of Strategy[1] is a good layperson level game theory book that will put you in the right mindset. It's not about fundraising at all, but that doesn't matter -- it's the mindset that's important IMO. [1] https://www.amazon.com/Art-Strategy-Theorists-Success-Business-ebook/dp/B001FA0NOM/ https://www.amazon.com/Art-Strategy-Theorists-Success-Busine...
- AriaMinaei 8y ago
  Many thanks :)