5 ms·

Dear OP: 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

by nirvana 14y ago

Dear OP: 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

TheSOB88 14y ago
Right, because every startup is Worth It (TM l'Oreal). :P 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?
- seigenblues 14y ago
  No, it isn't. 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/daniel-kahneman-bias-studies.html http://www.newyorker.com/online/blogs/frontal-cortex/2012/06...)
  - jbreinlinger 14y ago
    Thanks for the feedback ;)
    - seigenblues 14y ago
      No problem :) I think you're catching enough flak for your over-50 comments below, so I didn't mention that one ;) 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!
    - javajosh 14y ago
      There is a sense of sustained confidence, of inevitability, of capability, that investors must look for in their founders. A person like this is bound to have a history of success, large and small. They can't help it. And none of these qualities are correlated to personality type or financial status. Such people are simply incessant creators. They cannot stop creating. You might try to stop them creating, and they would still find a way to thwart you and create anyway. 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.
      - rexreed 14y ago
        What I usually say: 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.
taskstrike 14y ago
Unfortunately, the market dynamic is that there are lot more startups looking for funding that VCs looking for startups to fund. The reverse rejection does not work in this case.
- rexreed 14y ago
  The general rule is that if you are looking for venture capital, rather than the other way around, you're either not going to get very far or get a good deal. In other words, it's better to be wanted than to want. And that is the fundamental truth of every market, including the ones of venture capital and personal relationships. 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).
jayliew 14y ago
This response just proves the OP's point. Give him credit for opening up, instead of this response (which is not constructive), and comes off as an attack back at him. 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.
- rexreed 14y ago
  I'm not sure I interpret the above post you respond to as an attack. 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.
  - jayliew 14y ago
    Perhaps this is merely a difference in perception. I re-read nirvana's post I originally responded after reading your perception of it, and it comes off defensive and passive aggressive. In particular: "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. [1] http://en.wikipedia.org/wiki/The_Fox_and_the_Grapes http://en.wikipedia.org/wiki/The_Fox_and_the_Grapes
jessedhillon 14y ago
You couldn't have given a better example of a defensive, immature response that discourages actual dialogue. It's also a little pathetic, in a "sour grapes" sort of way. If you had the ability to turn down VCs for these reasons, you wouldn't be facing this kind of rejection.
sk55 14y ago
Though your statement may be "true", you're missing the power play in the situation. Startups ask VCs for money. Send a letter out like this, and you're not getting money from them. The point isn't to be right, it's to get money and if as a founder you go against that goal, I would consider it irresponsible (unless you think strongly that this specific VC is damaging to your company...but then just choose not to take money from them instead of sending a rude letter). 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.

by nirvana 14y ago

TheSOB88 14y ago

Right, because every startup is Worth It (TM l'Oreal). :P 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?

seigenblues 14y ago
No, it isn't. 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/daniel-kahneman-bias-studies.html http://www.newyorker.com/online/blogs/frontal-cortex/2012/06...)
- jbreinlinger 14y ago
  Thanks for the feedback ;)
  - seigenblues 14y ago
    No problem :) I think you're catching enough flak for your over-50 comments below, so I didn't mention that one ;) 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!
  - javajosh 14y ago
    There is a sense of sustained confidence, of inevitability, of capability, that investors must look for in their founders. A person like this is bound to have a history of success, large and small. They can't help it. And none of these qualities are correlated to personality type or financial status. Such people are simply incessant creators. They cannot stop creating. You might try to stop them creating, and they would still find a way to thwart you and create anyway. 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.
    - rexreed 14y ago
      What I usually say: 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.

taskstrike 14y ago

Unfortunately, the market dynamic is that there are lot more startups looking for funding that VCs looking for startups to fund. The reverse rejection does not work in this case.

rexreed 14y ago
The general rule is that if you are looking for venture capital, rather than the other way around, you're either not going to get very far or get a good deal. In other words, it's better to be wanted than to want. And that is the fundamental truth of every market, including the ones of venture capital and personal relationships. 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).

jayliew 14y ago

This response just proves the OP's point. Give him credit for opening up, instead of this response (which is not constructive), and comes off as an attack back at him. 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.

rexreed 14y ago
I'm not sure I interpret the above post you respond to as an attack. 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.
- jayliew 14y ago
  Perhaps this is merely a difference in perception. I re-read nirvana's post I originally responded after reading your perception of it, and it comes off defensive and passive aggressive. In particular: "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. [1] http://en.wikipedia.org/wiki/The_Fox_and_the_Grapes http://en.wikipedia.org/wiki/The_Fox_and_the_Grapes

jessedhillon 14y ago

You couldn't have given a better example of a defensive, immature response that discourages actual dialogue. It's also a little pathetic, in a "sour grapes" sort of way. If you had the ability to turn down VCs for these reasons, you wouldn't be facing this kind of rejection.

sk55 14y ago

Though your statement may be "true", you're missing the power play in the situation. Startups ask VCs for money. Send a letter out like this, and you're not getting money from them. The point isn't to be right, it's to get money and if as a founder you go against that goal, I would consider it irresponsible (unless you think strongly that this specific VC is damaging to your company...but then just choose not to take money from them instead of sending a rude letter). 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.