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.
"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.
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.
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.
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.
>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.
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.
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.
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.
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.
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.
> 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.
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.
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"...
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.