12 ms·

Why I don’t usually meet startups in person (2019)

128 points by luu 6y ago

wayoutthere 6y ago
Along these same lines, I've heard from clients that during the pandemic they started to magically hit their diversity hiring numbers now that they judge applicants on their performance rather than how much they "like" them. Remote interviews have leveled the playing field and forced them to make more objective decisions about who to hire. Suddenly there is no "pipeline problem"...
- throwaway82931 6y ago
  I'm glad to hear that. It makes perfect sense that reducing the subjective "culture fit" factor reduces hiring bias. But I would also say that as someone who has experience at the highest levels of open source organizations and who has witnessed the extraordinary extent to which entrenched parties will fight to keep structural discrimination in place: Don't underestimate people's ability to discriminate based on identity alone, without having met in person.
  - wayoutthere 6y ago
    Yeah, some of that behavior is constrained given the paper trail that is left when interviewers have to communicate through collaboration tools. People are on their best behavior if they know they might get caught.
    - throwaway82931 6y ago
      Absolutely. At open source orgs, the internal communication channels are way worse than the public ones. People advocate for positions all the time which would negatively impact their careers if made public.
      - ghaff 6y ago
        I'm not sure what you mean by "open source orgs" or why you felt you needed to create a throwaway account to leave the comment. But, in general, "internal communications channels" on open source projects are something of an anti-pattern. Certainly, private board member (or other person-to-person) communications can be necessary but what you're describing sounds like an unhealthy atmosphere in general if there's a lot of contentious backchannel comms.
        throwaway82931 6y ago
        By "open source orgs" I mean entities such as all the non-profits which host/support open source projects. You're right about it being unhealthy, unfortunately. It might be for the best if it dies and is replaced by something else.
  - bigpumpkin 6y ago
    I think this is especially true for large companies. Whereas a tiny startup may be given some leeway because people interact constantly and have a more defined culture, larger companies' culture are generally amorphous blobs that are more easily an excuse for bias based on common background/age/class/gender/ethnicity.
- OrangeKnucles 6y ago
  I don't think it's true. Anecdotes aren't evidence. Most people losing their jobs during the pandemic have been diversity hires. Capitalism doesn't allow for much discrimination. Slight discrimination can occur but not too much. If you won't hire LeBron James because he is black, someone else will.
- CyberDildonics 6y ago
  Any company that has diversity hiring numbers that they are supposed to hit is discriminating based on factors outside of performance if it influences their hiring process at all.
  - lalos 6y ago
    I would assume that diversity hiring numbers are based on demographics, if not they would be almost impossible to meet.
  - wayoutthere 6y ago
    Diversity numbers are measured after the fact. Diversity hiring is done by filling the front of the pipeline with a diverse set of candidates (i.e. getting the interview) but hiring decisions are made independently.
    - ifokiedoke 6y ago
      > Diversity hiring is done by filling the front of the pipeline with a diverse set of candidates (i.e. getting the interview) but hiring decisions are made independently. I don't think people realize how important this is. I certainly didn't until I had a random meeting with the recruiting team at $OLDJOB. It's basic statistics, when you think about it. By the definition of "under-represented group", you know that there is a much higher likelihood that the over-represented group will make up the majority of the first X resumes you receive. This means that even if you're completely unbiased and will hire based on merit (whatever that means), simply choosing the best of the first X applications will lead you to fail at diversity hiring anyway. Companies say they want to hire the best person but this is subject to reality and part of reality is wanting to hire this person as quick as possible. So it really is paramount that the pipeline is front-loaded, or you'll be thwarted by the reality of statistical majority.
  - ojnabieoot 6y ago
    The hypothetical you’re clearly referring to here is a high-performing white or Asian applicant who regrettably has to be rejected to make room for a mediocre black applicant. This concern is 1% based in reality and 99% based in racist resentment. Companies make hiring decisions based on all sorts of factors that have nothing to do with performance. Two extremely problematic ones are: 1) soft “skills” like charisma, rapport, etc, which are much more about social identity than social ability, and in particular discriminate against nonwhites, women, and many LGBT people 2) Unvarnished and criminal Klan-style racism, such as turning down a well-qualified job applicant because his name is Jamal, or assuming a black woman must have lied about her 3.9 GPA, which is still rampant in all 50 United States, and an enormous reason for the black-white wealth and income disparity. This sort of blatant discrimination has been repeatedly observed in the 21st century and is a plain fact. These two practices are not only widespread and illegal, they also deprive companies of good talent. The reason for diversity quotas isn’t to distort a (nonexistent) meritocratic hiring process, but instead to correct grotesque violations in actually existing hiring practices.
Animats 6y ago
"In the venture community today, we reward “visionaries” much more than executors." The former CEO of Better Place comes to mind. Blew through most of a billion dollars, accomplished very little, went bankrupt. But he's tall, very good looking, and a great speaker.
- ghaff 6y ago
  Probably not the best example. He did have a track record including having been a senior exec at SAP. Better Place was almost certainly ill-conceived from the start but it was probably the only way to make electric cars work at the time.
- petra 6y ago
  I'm not sure. They did sell cars in Israel. They did have battery replacement centers. They failed because they we're too expensive. That's mainly because they had really large fixed costs - cars, selling them , deploying charging centers through the country and holding all that battery inventory. Maybe if they'd target a single city and instead of manufacturing cars with citroen , put some effort into converting, cheaply, pickup trucks to taxis(who will replace batteries every day and spend a lot on fuel and maintenance) they could have had a working business model and go from there. But for that, one has be humble. I wonder, what's the correlation between humility and startup sucsess rate ?
- cosmodisk 6y ago
  >But he's tall, very good looking, and a great speaker. Never heard of the guy before.Googled to see how well he does public speaking and landed on some TED talk. If I'd talk like him,I would have became a millionaire quite some years ago. However, some of the stuff he says,may have sounded smart in 2010 but today it sounds like complete tosh.
  - Animats 6y ago
    That's him, all right.
- btian 6y ago
  I'm not sure if anyone could have executed that idea. Even Elon Musk couldn't make it work
draw_down 6y ago
> what I love about the VC industry is that people tend to have incredibly strong opinions based on limited or no data Then proceeds express this opinion with no data. Groovy.
LegitGandalf 6y ago
Yep, it doesn't matter in the slightest how charismatic the founder is if their product isn't going to get traction. I mean, rate founder charisma versus these things: * Chaos in product - whenever consumers try the product, it bites them * Packaging misfit - founder drove an IOS app out when market really needs a web experience * Product lacks rarity - Founder is driving a new iKnockoff when there are scaled competitors already penetrating the market The list of things that are more important than the founder's charisma goes on and on. Frankly the charisma at the helm is really more applicable when the company is fully established and has a fan base. For a startup, if the product needs someone charismatic to get traction, hire someone charismatic to sell it.
- fillskills 6y ago
  One person’s charisma is another person’s irritation!
- ashtonkem 6y ago
  Charisma doesn’t scale. But it does work on low volume high leverage audiences; e.g. VCs.
- icedchai 6y ago
  If you think it doesn't matter, you've never been around someone with real charisma. They can BS their way into anything, especially investor wallets. This charisma is actually most useful before the startup has a product. Once the rubber meets the road, those lofty forecasts and powerpoints full of fiction are less useful.
Leary 6y ago
I would think that an in-person meeting could be substituted by videos calls in the current circumstances, but that phones calls/emails are inferior given the information bandwidth is a lot narrower. There are lots of different kinds of charisma and they interact differently with a company's potential depending on the business models. For example, a highly technically competent founder may in itself be very charismatic to engineers.
jariel 6y ago
Visionaries get other people to act, and that's important. WeWork is not a real company, built on Koolaid. This is the paradox. Without the founder's BS it likely would not have happened. Though his forecasts were rubbish, there was (and is) a material, underlying business. It doesn't take an extrovert to pump the Koolaid a lot of awkward people have kind of a stubborn/lack-of-self-awareness kind of focus, and their own self-belief gives confidence to others. I think it's rare that successful companies are built without a little bit of 'stupid confidence'. Which at first glance is a paradox, but not once you think about it.
- logifail 6y ago
  > Visionaries get other people to act, and that's important. Good visionaries can certainly get people to act in good ways. It appears that there are other kinds of visionaries who get (good?) people to act in bad ways.
ilamont 6y ago
In the venture community today, we reward “visionaries” much more than executors. And a big reason for this is that we make investment decisions based on pitches rather than on execution (aka working) in our decision-making. Another reason is everyone wants to back the next Steve Jobs, and if you don't have those Jobsian traits, you fail the investor pattern-matching test. Some startup CEOs know this, and have really perfected the VC signaling down to choices of clothing, speaking styles, and shitty treatment of (some) employees. I heard something similar from an older advisor at the MIT Venture Mentoring Service. He said something to the effect of, "if you're not raring to go" and "your board has to practically hold you back" then investors wouldn't fund you. He was probably right.
- pavlov 6y ago
  > "have really perfected the VC signaling down to choices of clothing, speaking styles, and shitty treatment of (some) employees" Elizabeth Holmes of Theranos comes to mind...
  - ashtonkem 6y ago
    One of the more funny aspects of human psychology is that when someone perfectly matched their signals to a very specific audience, it looks ridiculous to anyone not a member of the target audience. Holmes is possibly one of the most perfect example of this. To any non-VC it’s obvious that wearing a black turtleneck is not a necessary precondition to being the next Steve Jobs, but the VC and media commentators fell for it hook line and sinker.
    - icedchai 6y ago
      It has little to do with the turtle neck. Read the book or watch the documentary. Elizabeth Holmes was born into money. Her family had connections. One of her first investors was a well known VC and neighbor. All you need is a couple of connections like that to get credibility.
      - Talanes 6y ago
ftio 6y ago
I feel about this the same way I feel about interviewing eng, PM, and particularly sales candidates. Before you pull the trigger on investing, hiring, whatever, you should meet with candidates at least once in the way they'll be performing the job. If you're hiring a cold calling salesperson, you should not interview them in person — ever. Their performance is going to be determined – on the job — over the phone, so you should interview them over the phone. If you're hiring a remote developer, you should interview them remotely. The inverse is true as well: if you're hiring someone to be in the office every day, interview them in the office. Same goes for investing. How are are you going to be primarily interacting with this team? If you're interacting primarily remotely (e.g., not in the context of a shared-workspace startup incubator), you should feel comfortable interviewing remotely as well. It'll give you a better sense of how your interactions will go in the day-to-day running of the business. The author's view on using in-person meetings as a way to get a 'feel' for a person resonates with me: it sounds appealing, but it introduces an additional opportunity for bias relative to talking on the phone or even over VC.
- deleted 6y ago
  [deleted]
- cutemonster 6y ago
  You can find black swans when meeting in person
- nradov 6y ago
  Where is the evidence for your approach outperforming the alternatives? Hiring is highly subject to confirmation bias. And the false negative results are never quantified.
rexreed 6y ago
Unpopular opinion: it really doesn't matter what VCs do or don't do. Most VCs dreadfully under-perform the market. The rate of VC success is mostly related to chance or some unfair advantage in getting into early winners. Most VCs are awful. Meet with them in person, not in person, it doesn't matter. I treat advice from VCs pretty much the same as a random money manager. Maybe what they're saying makes sense, maybe not, but it doesn't deserve any heavy weight. The 80/20 rule applies heavily to VCs. A very small number of VCs are responsible for the majority of returns. The rest are just chasing deals around. Chase in person. Chase not in person. It really doesn't matter.
- 4636760295 6y ago
  *most VCs dreadfully underperform. Even the top performers don't do so well once you factor in fees and everything else.
  - ISL 6y ago
    Do VCs charge themselves fees?
    - adambyrtek 6y ago
      VCs invest money raised from LPs (limited partners) and usually charge an annual fee on assets under management and also get a share of any profits.
    - dpoochieni 6y ago
      If its anything like private equity (bigger company VC's), they charge their limited partners an annual fee. Around 1 or 2%
    - rexreed 6y ago
      You should read this: https://hbr.org/2013/05/six-myths-about-venture-capitalists https://hbr.org/2013/05/six-myths-about-venture-capitalists "the standard VC fund charges an annual fee of 2% on committed capital over the life of the fund—usually 10 years—plus a percentage of the profits when firms successfully exit, usually by being acquired or going public. So a firm that raised a $1 billion fund and charged a 2% fee would receive a fixed fee stream of $20 million a year to cover expenses and compensation. VC firms raise new funds about every three or four years, so let’s say that three years into the first fund, the firm raised a second $1 billion fund. That would generate an additional $20 million in fees, for a total of $40 million annually. These cumulative and guaranteed management fees insulate VC partners from poor returns because much of their compensation comes from fees. Many partners take home compensation in the seven figures regardless of the fund’s investment performance. Most entrepreneurs have no such safety net. " Yup, those high-flying VCs? making money the same way money managers too - taking a cut of assets under management (AUM). Nothing to do with their investment prowess -- just gather lots of money, take a cut of that gathering, and whether or not the investors make money won't impact your paycheck. yes there's a nice bonus if you make it, but that's not necessary. That's how the 80% of VCs that don't generate substantial returns are making a living.
jayparth 6y ago
We met with Elizabeth virtually (didn't like the idea but wanted to invest if we pivoted.) Very fair process & a sharp person to boot- I don't think we lost anything over an in-person meeting.
bobloblaw45 6y ago
If I had the money I'd secretly get employed at startups I was interested in to see if they were just a bunch of jokers or not. I'd do this is because if I were that rich then I probably won the lottery and stupidly quit my job without thinking and would probably be very bored.
- shoo 6y ago
  maybe you can start a business to provide this kind of undercover intelligence to VCs, e.g. you get paid a monthly retainer by some prospective investors to work undercover at a sequence of maybe-joking-startups and write dispatches reporting on what you see really going on.
- mtnGoat 6y ago
  i know a person who did this. he wanted to acquire a company and asked to be hired on for 3 months before it was announced. This way he had time to figure out who was good, who was awesome and who was toxic.
  - watwut 6y ago
    Sounds a great way to make employees to perceive you as dishonest from the start.
jrockway 6y ago
I like the idea of taking notes and then making your decision based on the notes. That's how the Google interviewing process worked, and I think it emphasizes the things that matter and lets you filter through the things that don't. People have a laundry list of things to do in an interview to hack the system: what you wear, what kinds of follow-up questions you ask, etc. None of those things ever make it into the notes. Only your thought process as it applies to software engineering ends up in there. To some extent, this really mirrors how we buy consumer products. We read a bunch of experiences and data collected by other people, then make a decision based only on those written notes. Meanwhile, enterprise products are sold by who buys you the best golf outing or who sends you the nicest holiday present. If you remove that source of bias, only the facts stand out. Could be a good technique to apply more widely. Do you want the product that has the best experience from other users, or do you want the one that buys you stuff every few months? As the purchasing manager, of course you want the kickbacks. But the company itself probably wants the one with the best user experience. Something to think about.
- cutemonster 6y ago
  > making your decision based on the notes And can wait some days in between too, to better forget the in person impression
julianeon 6y ago
I was curious, after seeing this in the article: > “Contrarian perspective here – it’s ok to not meet a founder in person before deciding to invest.” > This set off a tweet firestorm — mostly with people telling me in some form or fashion that I was wrong. I decided to look on Twitter to see more about the controversy, and while I couldn't find as many VC's discussing it as I remembered (maybe some are shy, maybe some use different words than I used in my search), you can see the varied responses below. It seems like Andreesen's investment in Clubhouse may have been a watershed moment also - legitimizing remote investing for everyone else. https://www.mediazed.com/vc-not-meet-in-person.html https://www.mediazed.com/vc-not-meet-in-person.html
artsyca 6y ago
When you create a corporation, you're essentially creating a society (remember: culture is the foundation of society and society is the foundation of civilization) You can model your society in any way you wish but the intention ought to be to make your society more competitive and capable than the default (i.e. society at large) The socialist system is something along the lines of 'from each according to his abilities to each according to his needs' but that has never worked out in practice. There are other systems but the capitalist system ('to each according to his investment, from the collective pot') is close but we mistake what investment is and we drastically misunderstand how to maximize the collective pot. The whole VC system as it currently stands is a symptom of our distorted view of what investment is and the breakdown of trust required for people to truly maximize their returns, nothing more. VC's bring money to the table and it seems that this buys them enhanced privilege compared to people who bring other sorts of investment. The minute you begin the VC conversation you begin devaluing the investments of people who bring other sorts of investment (i.e. faith, effort, opportunity costs) and create a sort of toxic feedback bubble whereby the entire system goes off the rails because apart from the money the VC's are hardly invested in your vision, innit hence the term 'vulture capitalists' -- how are VC's any different from tech recruiters anyway?. The only way to make any money is to sell something somebody else makes.
- kortilla 6y ago
  > culture is the foundation of society and society is the foundation of civilization That’s a terrible analogy because it’s trivial for the culture to change without civilization being put at risk. Foundations can’t be substantially changed without risking everything on top.
  - artsyca 6y ago
    What are you saying? the minute culture shifts so does civilization. Look at where we are now compared to where we were in the industrial age. This whole techbro culture has destroyed corporate society and brought about drastic shifts in the entire world civilization and not for the better. What is this wishful thinking? Edit: and by the way the word 'culture' comes from the latin for 'core' it's by definition the foundation. I can't believe we're arguing the semantics of well-known words look up culture and society for yourself. Edit 2: think of your culture like a potluck dinner. Everyone brings their carefully prepared dishes. Some latecomer shows up to the door with a wad of cash and says I didn't prepare anything but suddenly the money they brought entitles them to be first in line. What kind of civilization can exist under these cultural manners?
daenz 6y ago
>This top female VC, however, realized that, although she was more excited about the male founder’s pitch, when she objectively thought about what he had accomplished, she realized it wasn’t much. And that the female founder had knocked it out of the park although her storytelling wasn’t as amazing. This story is a true story and this happens all the time in venture. Aren't VCs also investing in companies that they are betting can raise more money down the road? If you invest in someone who persuades you at a "gut" level, you're taking into account that they will also persuade others at a gut level.
- ShrCul 6y ago
  But if their product is mediocre then it doesn't matter how many investors they pull in. In the long term, would they actually make a significant amount of money when customers aren't that attracted or satisfied?

128 points by luu 6y ago

Along these same lines, I've heard from clients that during the pandemic they started to magically hit their diversity hiring numbers now that they judge applicants on their performance rather than how much they "like" them. Remote interviews have leveled the playing field and forced them to make more objective decisions about who to hire. Suddenly there is no "pipeline problem"...

throwaway82931 6y ago
I'm glad to hear that. It makes perfect sense that reducing the subjective "culture fit" factor reduces hiring bias. But I would also say that as someone who has experience at the highest levels of open source organizations and who has witnessed the extraordinary extent to which entrenched parties will fight to keep structural discrimination in place: Don't underestimate people's ability to discriminate based on identity alone, without having met in person.
- wayoutthere 6y ago
  Yeah, some of that behavior is constrained given the paper trail that is left when interviewers have to communicate through collaboration tools. People are on their best behavior if they know they might get caught.
  - throwaway82931 6y ago
    Absolutely. At open source orgs, the internal communication channels are way worse than the public ones. People advocate for positions all the time which would negatively impact their careers if made public.
    - ghaff 6y ago
      I'm not sure what you mean by "open source orgs" or why you felt you needed to create a throwaway account to leave the comment. But, in general, "internal communications channels" on open source projects are something of an anti-pattern. Certainly, private board member (or other person-to-person) communications can be necessary but what you're describing sounds like an unhealthy atmosphere in general if there's a lot of contentious backchannel comms.
      - throwaway82931 6y ago
        By "open source orgs" I mean entities such as all the non-profits which host/support open source projects. You're right about it being unhealthy, unfortunately. It might be for the best if it dies and is replaced by something else.
- bigpumpkin 6y ago
  I think this is especially true for large companies. Whereas a tiny startup may be given some leeway because people interact constantly and have a more defined culture, larger companies' culture are generally amorphous blobs that are more easily an excuse for bias based on common background/age/class/gender/ethnicity.
OrangeKnucles 6y ago
I don't think it's true. Anecdotes aren't evidence. Most people losing their jobs during the pandemic have been diversity hires. Capitalism doesn't allow for much discrimination. Slight discrimination can occur but not too much. If you won't hire LeBron James because he is black, someone else will.
CyberDildonics 6y ago
Any company that has diversity hiring numbers that they are supposed to hit is discriminating based on factors outside of performance if it influences their hiring process at all.
- lalos 6y ago
  I would assume that diversity hiring numbers are based on demographics, if not they would be almost impossible to meet.
- wayoutthere 6y ago
  Diversity numbers are measured after the fact. Diversity hiring is done by filling the front of the pipeline with a diverse set of candidates (i.e. getting the interview) but hiring decisions are made independently.
  - ifokiedoke 6y ago
    > Diversity hiring is done by filling the front of the pipeline with a diverse set of candidates (i.e. getting the interview) but hiring decisions are made independently. I don't think people realize how important this is. I certainly didn't until I had a random meeting with the recruiting team at $OLDJOB. It's basic statistics, when you think about it. By the definition of "under-represented group", you know that there is a much higher likelihood that the over-represented group will make up the majority of the first X resumes you receive. This means that even if you're completely unbiased and will hire based on merit (whatever that means), simply choosing the best of the first X applications will lead you to fail at diversity hiring anyway. Companies say they want to hire the best person but this is subject to reality and part of reality is wanting to hire this person as quick as possible. So it really is paramount that the pipeline is front-loaded, or you'll be thwarted by the reality of statistical majority.
- ojnabieoot 6y ago
  The hypothetical you’re clearly referring to here is a high-performing white or Asian applicant who regrettably has to be rejected to make room for a mediocre black applicant. This concern is 1% based in reality and 99% based in racist resentment. Companies make hiring decisions based on all sorts of factors that have nothing to do with performance. Two extremely problematic ones are: 1) soft “skills” like charisma, rapport, etc, which are much more about social identity than social ability, and in particular discriminate against nonwhites, women, and many LGBT people 2) Unvarnished and criminal Klan-style racism, such as turning down a well-qualified job applicant because his name is Jamal, or assuming a black woman must have lied about her 3.9 GPA, which is still rampant in all 50 United States, and an enormous reason for the black-white wealth and income disparity. This sort of blatant discrimination has been repeatedly observed in the 21st century and is a plain fact. These two practices are not only widespread and illegal, they also deprive companies of good talent. The reason for diversity quotas isn’t to distort a (nonexistent) meritocratic hiring process, but instead to correct grotesque violations in actually existing hiring practices.

Animats 6y ago

"In the venture community today, we reward “visionaries” much more than executors." The former CEO of Better Place comes to mind. Blew through most of a billion dollars, accomplished very little, went bankrupt. But he's tall, very good looking, and a great speaker.

ghaff 6y ago
Probably not the best example. He did have a track record including having been a senior exec at SAP. Better Place was almost certainly ill-conceived from the start but it was probably the only way to make electric cars work at the time.
petra 6y ago
I'm not sure. They did sell cars in Israel. They did have battery replacement centers. They failed because they we're too expensive. That's mainly because they had really large fixed costs - cars, selling them , deploying charging centers through the country and holding all that battery inventory. Maybe if they'd target a single city and instead of manufacturing cars with citroen , put some effort into converting, cheaply, pickup trucks to taxis(who will replace batteries every day and spend a lot on fuel and maintenance) they could have had a working business model and go from there. But for that, one has be humble. I wonder, what's the correlation between humility and startup sucsess rate ?
cosmodisk 6y ago
>But he's tall, very good looking, and a great speaker. Never heard of the guy before.Googled to see how well he does public speaking and landed on some TED talk. If I'd talk like him,I would have became a millionaire quite some years ago. However, some of the stuff he says,may have sounded smart in 2010 but today it sounds like complete tosh.
- Animats 6y ago
  That's him, all right.
btian 6y ago
I'm not sure if anyone could have executed that idea. Even Elon Musk couldn't make it work

draw_down 6y ago

> what I love about the VC industry is that people tend to have incredibly strong opinions based on limited or no data Then proceeds express this opinion with no data. Groovy.

LegitGandalf 6y ago

Yep, it doesn't matter in the slightest how charismatic the founder is if their product isn't going to get traction. I mean, rate founder charisma versus these things: * Chaos in product - whenever consumers try the product, it bites them * Packaging misfit - founder drove an IOS app out when market really needs a web experience * Product lacks rarity - Founder is driving a new iKnockoff when there are scaled competitors already penetrating the market The list of things that are more important than the founder's charisma goes on and on. Frankly the charisma at the helm is really more applicable when the company is fully established and has a fan base. For a startup, if the product needs someone charismatic to get traction, hire someone charismatic to sell it.

fillskills 6y ago
One person’s charisma is another person’s irritation!
ashtonkem 6y ago
Charisma doesn’t scale. But it does work on low volume high leverage audiences; e.g. VCs.
icedchai 6y ago
If you think it doesn't matter, you've never been around someone with real charisma. They can BS their way into anything, especially investor wallets. This charisma is actually most useful before the startup has a product. Once the rubber meets the road, those lofty forecasts and powerpoints full of fiction are less useful.

Leary 6y ago

I would think that an in-person meeting could be substituted by videos calls in the current circumstances, but that phones calls/emails are inferior given the information bandwidth is a lot narrower. There are lots of different kinds of charisma and they interact differently with a company's potential depending on the business models. For example, a highly technically competent founder may in itself be very charismatic to engineers.

jariel 6y ago

Visionaries get other people to act, and that's important. WeWork is not a real company, built on Koolaid. This is the paradox. Without the founder's BS it likely would not have happened. Though his forecasts were rubbish, there was (and is) a material, underlying business. It doesn't take an extrovert to pump the Koolaid a lot of awkward people have kind of a stubborn/lack-of-self-awareness kind of focus, and their own self-belief gives confidence to others. I think it's rare that successful companies are built without a little bit of 'stupid confidence'. Which at first glance is a paradox, but not once you think about it.

logifail 6y ago
> Visionaries get other people to act, and that's important. Good visionaries can certainly get people to act in good ways. It appears that there are other kinds of visionaries who get (good?) people to act in bad ways.

ilamont 6y ago

In the venture community today, we reward “visionaries” much more than executors. And a big reason for this is that we make investment decisions based on pitches rather than on execution (aka working) in our decision-making. Another reason is everyone wants to back the next Steve Jobs, and if you don't have those Jobsian traits, you fail the investor pattern-matching test. Some startup CEOs know this, and have really perfected the VC signaling down to choices of clothing, speaking styles, and shitty treatment of (some) employees. I heard something similar from an older advisor at the MIT Venture Mentoring Service. He said something to the effect of, "if you're not raring to go" and "your board has to practically hold you back" then investors wouldn't fund you. He was probably right.

pavlov 6y ago
> "have really perfected the VC signaling down to choices of clothing, speaking styles, and shitty treatment of (some) employees" Elizabeth Holmes of Theranos comes to mind...
- ashtonkem 6y ago
  One of the more funny aspects of human psychology is that when someone perfectly matched their signals to a very specific audience, it looks ridiculous to anyone not a member of the target audience. Holmes is possibly one of the most perfect example of this. To any non-VC it’s obvious that wearing a black turtleneck is not a necessary precondition to being the next Steve Jobs, but the VC and media commentators fell for it hook line and sinker.
  - icedchai 6y ago
    It has little to do with the turtle neck. Read the book or watch the documentary. Elizabeth Holmes was born into money. Her family had connections. One of her first investors was a well known VC and neighbor. All you need is a couple of connections like that to get credibility.
    - Talanes 6y ago

ftio 6y ago

I feel about this the same way I feel about interviewing eng, PM, and particularly sales candidates. Before you pull the trigger on investing, hiring, whatever, you should meet with candidates at least once in the way they'll be performing the job. If you're hiring a cold calling salesperson, you should not interview them in person — ever. Their performance is going to be determined – on the job — over the phone, so you should interview them over the phone. If you're hiring a remote developer, you should interview them remotely. The inverse is true as well: if you're hiring someone to be in the office every day, interview them in the office. Same goes for investing. How are are you going to be primarily interacting with this team? If you're interacting primarily remotely (e.g., not in the context of a shared-workspace startup incubator), you should feel comfortable interviewing remotely as well. It'll give you a better sense of how your interactions will go in the day-to-day running of the business. The author's view on using in-person meetings as a way to get a 'feel' for a person resonates with me: it sounds appealing, but it introduces an additional opportunity for bias relative to talking on the phone or even over VC.

deleted 6y ago
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cutemonster 6y ago
You can find black swans when meeting in person
nradov 6y ago
Where is the evidence for your approach outperforming the alternatives? Hiring is highly subject to confirmation bias. And the false negative results are never quantified.

rexreed 6y ago

Unpopular opinion: it really doesn't matter what VCs do or don't do. Most VCs dreadfully under-perform the market. The rate of VC success is mostly related to chance or some unfair advantage in getting into early winners. Most VCs are awful. Meet with them in person, not in person, it doesn't matter. I treat advice from VCs pretty much the same as a random money manager. Maybe what they're saying makes sense, maybe not, but it doesn't deserve any heavy weight. The 80/20 rule applies heavily to VCs. A very small number of VCs are responsible for the majority of returns. The rest are just chasing deals around. Chase in person. Chase not in person. It really doesn't matter.

4636760295 6y ago
*most VCs dreadfully underperform. Even the top performers don't do so well once you factor in fees and everything else.
- ISL 6y ago
  Do VCs charge themselves fees?
  - adambyrtek 6y ago
    VCs invest money raised from LPs (limited partners) and usually charge an annual fee on assets under management and also get a share of any profits.
  - dpoochieni 6y ago
    If its anything like private equity (bigger company VC's), they charge their limited partners an annual fee. Around 1 or 2%
  - rexreed 6y ago
    You should read this: https://hbr.org/2013/05/six-myths-about-venture-capitalists https://hbr.org/2013/05/six-myths-about-venture-capitalists "the standard VC fund charges an annual fee of 2% on committed capital over the life of the fund—usually 10 years—plus a percentage of the profits when firms successfully exit, usually by being acquired or going public. So a firm that raised a $1 billion fund and charged a 2% fee would receive a fixed fee stream of $20 million a year to cover expenses and compensation. VC firms raise new funds about every three or four years, so let’s say that three years into the first fund, the firm raised a second $1 billion fund. That would generate an additional $20 million in fees, for a total of $40 million annually. These cumulative and guaranteed management fees insulate VC partners from poor returns because much of their compensation comes from fees. Many partners take home compensation in the seven figures regardless of the fund’s investment performance. Most entrepreneurs have no such safety net. " Yup, those high-flying VCs? making money the same way money managers too - taking a cut of assets under management (AUM). Nothing to do with their investment prowess -- just gather lots of money, take a cut of that gathering, and whether or not the investors make money won't impact your paycheck. yes there's a nice bonus if you make it, but that's not necessary. That's how the 80% of VCs that don't generate substantial returns are making a living.

jayparth 6y ago

We met with Elizabeth virtually (didn't like the idea but wanted to invest if we pivoted.) Very fair process & a sharp person to boot- I don't think we lost anything over an in-person meeting.

bobloblaw45 6y ago

If I had the money I'd secretly get employed at startups I was interested in to see if they were just a bunch of jokers or not. I'd do this is because if I were that rich then I probably won the lottery and stupidly quit my job without thinking and would probably be very bored.

shoo 6y ago
maybe you can start a business to provide this kind of undercover intelligence to VCs, e.g. you get paid a monthly retainer by some prospective investors to work undercover at a sequence of maybe-joking-startups and write dispatches reporting on what you see really going on.
mtnGoat 6y ago
i know a person who did this. he wanted to acquire a company and asked to be hired on for 3 months before it was announced. This way he had time to figure out who was good, who was awesome and who was toxic.
- watwut 6y ago
  Sounds a great way to make employees to perceive you as dishonest from the start.

jrockway 6y ago

I like the idea of taking notes and then making your decision based on the notes. That's how the Google interviewing process worked, and I think it emphasizes the things that matter and lets you filter through the things that don't. People have a laundry list of things to do in an interview to hack the system: what you wear, what kinds of follow-up questions you ask, etc. None of those things ever make it into the notes. Only your thought process as it applies to software engineering ends up in there. To some extent, this really mirrors how we buy consumer products. We read a bunch of experiences and data collected by other people, then make a decision based only on those written notes. Meanwhile, enterprise products are sold by who buys you the best golf outing or who sends you the nicest holiday present. If you remove that source of bias, only the facts stand out. Could be a good technique to apply more widely. Do you want the product that has the best experience from other users, or do you want the one that buys you stuff every few months? As the purchasing manager, of course you want the kickbacks. But the company itself probably wants the one with the best user experience. Something to think about.

cutemonster 6y ago
> making your decision based on the notes And can wait some days in between too, to better forget the in person impression

julianeon 6y ago

I was curious, after seeing this in the article: > “Contrarian perspective here – it’s ok to not meet a founder in person before deciding to invest.” > This set off a tweet firestorm — mostly with people telling me in some form or fashion that I was wrong. I decided to look on Twitter to see more about the controversy, and while I couldn't find as many VC's discussing it as I remembered (maybe some are shy, maybe some use different words than I used in my search), you can see the varied responses below. It seems like Andreesen's investment in Clubhouse may have been a watershed moment also - legitimizing remote investing for everyone else. https://www.mediazed.com/vc-not-meet-in-person.html https://www.mediazed.com/vc-not-meet-in-person.html

artsyca 6y ago

When you create a corporation, you're essentially creating a society (remember: culture is the foundation of society and society is the foundation of civilization) You can model your society in any way you wish but the intention ought to be to make your society more competitive and capable than the default (i.e. society at large) The socialist system is something along the lines of 'from each according to his abilities to each according to his needs' but that has never worked out in practice. There are other systems but the capitalist system ('to each according to his investment, from the collective pot') is close but we mistake what investment is and we drastically misunderstand how to maximize the collective pot. The whole VC system as it currently stands is a symptom of our distorted view of what investment is and the breakdown of trust required for people to truly maximize their returns, nothing more. VC's bring money to the table and it seems that this buys them enhanced privilege compared to people who bring other sorts of investment. The minute you begin the VC conversation you begin devaluing the investments of people who bring other sorts of investment (i.e. faith, effort, opportunity costs) and create a sort of toxic feedback bubble whereby the entire system goes off the rails because apart from the money the VC's are hardly invested in your vision, innit hence the term 'vulture capitalists' -- how are VC's any different from tech recruiters anyway?. The only way to make any money is to sell something somebody else makes.

kortilla 6y ago
> culture is the foundation of society and society is the foundation of civilization That’s a terrible analogy because it’s trivial for the culture to change without civilization being put at risk. Foundations can’t be substantially changed without risking everything on top.
- artsyca 6y ago
  What are you saying? the minute culture shifts so does civilization. Look at where we are now compared to where we were in the industrial age. This whole techbro culture has destroyed corporate society and brought about drastic shifts in the entire world civilization and not for the better. What is this wishful thinking? Edit: and by the way the word 'culture' comes from the latin for 'core' it's by definition the foundation. I can't believe we're arguing the semantics of well-known words look up culture and society for yourself. Edit 2: think of your culture like a potluck dinner. Everyone brings their carefully prepared dishes. Some latecomer shows up to the door with a wad of cash and says I didn't prepare anything but suddenly the money they brought entitles them to be first in line. What kind of civilization can exist under these cultural manners?

daenz 6y ago

>This top female VC, however, realized that, although she was more excited about the male founder’s pitch, when she objectively thought about what he had accomplished, she realized it wasn’t much. And that the female founder had knocked it out of the park although her storytelling wasn’t as amazing. This story is a true story and this happens all the time in venture. Aren't VCs also investing in companies that they are betting can raise more money down the road? If you invest in someone who persuades you at a "gut" level, you're taking into account that they will also persuade others at a gut level.

ShrCul 6y ago
But if their product is mediocre then it doesn't matter how many investors they pull in. In the long term, would they actually make a significant amount of money when customers aren't that attracted or satisfied?