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VCs love to say things like “we are entrepreneur friendly.” It’s trendy, catchy, and looks good on a blog post. But, as I’ve said in my post Your Words Should Match Your Actions, one can “damage their reputations by having their words not match up with their actions.”
Now – this post isn’t about responding to emails. Nor am I trying to be preachy. I’m not trying to explain a new behavior. Rather, I’m making an observation about something I’ve experienced – both as an entrepreneur and investor – since my first angel investment in 1994.
Here’s the situation, as reported this morning by an experienced CEO of a company we are investors in.
“We’re raising money. I have a good intro session. Prospective investor wants to meet in person, see a demo. We have a good 2nd meeting. We agree on action items. I go away and follow up.
Follow up again.
Radio silence still.
The first time it happened I was inclined to think it was the investor and that they just couldn’t find the time to send an email response saying, “sorry – no longer interested”. Then, it happened again this month.”
Now – initial non-responsiveness – whatever. Lots of people don’t respond to emails, intros, or requests for meetings. But after two in-person meetings, to be non-responsive is just plain rude.
How hard would be it be to say “Hey – great spending time with you – but this isn’t something I want to pursue.” Or maybe “Sorry for being slow – I’ve been swamped – I don’t have time for doing this right now.” Or – well – anything.
I’ve had this situation come up so many times that I’m immune to it. I assume that the VC isn’t interested. But I’m amazed at how the reputational damage follows the person around. And then – at some point in the future – that VC is looking for a response for something. Hmmm …
I’ve had this happen with LPs. When we went and raised our first fund in 2007, plenty of people wouldn’t meet with us. That’s fine. Lots said they weren’t interested after a first meeting. Totally cool. But some met with us but then were completely non-responsive after the meeting. Ok – whatever. But when those non-responsive LPs call me today asking for something – whether it’s to get together to “get to know me better”, or to get a reference on someone else they are looking at, or to learn more about what I think about the market for hardware investments, it’s really hard to get on the phone and spend time with them. I do – because that’s my nature – but I always remember their non-responsiveness.
I hear – and say – “No thank you” all the time. Every day. 50 times a day. That’s just part of the role I play in business. But I always try to say “No thank you.” It’s just not that hard. Especially when I know someone, or have engaged with them in some way.
Are you the guy the experienced CEO just encountered? How would you feel if your name – and your firm’s name – just went out via email to 60 CEOs attached to this story? Maybe you don’t care, but if your message is “we are entrepreneur-friendly VCs” you just undermined the reputation of your firm in a major way.
Over the past few months I’ve watched several powerful and successful VCs and entrepreneurs damage their reputations by having their words not match up with their actions. I think this is especially true in the context of a long term relationship.
This is a deeply held value of mine and of my partners at Foundry Group. I occasionally screw up and when I do I own it, apologize, and learn from it. But it stuns and amazes me when others assert strong style / values / culture and then consistently have their actions not line up with their words.
Here are a few VC examples:
VC asserts he’s “founder friendly”: This is currently in vogue across many VC firms. Very experienced VCs are talking about how they are focused entirely on supporting the entrepreneur. But then, when something goes wrong, they act randomly and capriciously. Or they simply disengage without warning. Or they try to retrade an earlier deal just because they think they can. Or they threaten to veto a deal unless they get something more than they are entitled to.
VC asserts certain followup behavior with every entrepreneur they meet with: In the vein of “we are holding ourselves to a high level of interaction”, the VC suggests a certain behavior pattern in their deal evaluation process or interaction with entrepreneurs. They do this sometimes, but are inconsistent.
VC suggests that the deal is firm and will happen: Then, two weeks into “due diligence” which, based on the previous evaluation, should be a proforma exercise, abruptly pull out of the deal because “some of my partners aren’t supportive.”
This, of course, isn’t limited to VC behavior. I see it all the time with entrepreneurs. For example:
Entrepreneur suggests he’s “radically transparent”: Nice, and popular, but do you tell your employees exactly how many months of cash you have left? Or do you keep the fact that you and your partner are having a major conflict from your investors? Or how about that your business isn’t doing very well and you are working every backchannel you know to try to have an acquihire happen for you that will have a negative impact on your investors.
Entrepreneur asserts he isn’t shopping the deal: And then he does. It’s ok to shop a deal, just don’t assert you aren’t!
Entrepreneur inflates his relationship with another entrepreneur or VC: It’s fine to be connected on LinkedIn or say you worked at the same company in the past, but don’t say you are best friends if you haven’t interacted with the other person in over a year.
I could keep going. It’s similar to what Amy and I wrote about in Startup Life: Surviving and Thriving in a Relationship with an Entrepreneur when we talk about your words having to match your actions. When I tell Amy that she is the most important thing in my life, and then am 30 minutes late to dinner because “I’ve just got to get something done” my words aren’t matching up with my actions. Or, when we are together, the phone rings, and I automatically answer it rather than asking if it’s ok for me to take the call. Or, when she gets hurt if I don’t drop everything I’m doing and go help her out.
Words matter. And having them match your actions matters matters even more.