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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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To Listen or Not To Listen

Comments (2)

Yesterday, I was on a conference call with an entrepreneur that I’ve backed in the past.  He wanted to walk me through the idea for a new business that he was working on.  His goal was simply to get feedback from me at the very early stage of his idea – he wasn’t pitching me for an investment.  We got about five minutes into the pitch when I interrupted him.

I’m an angel investor in a company that is addressing the same domain as him, uses similar language, and is going after a comparable problem.  I didn’t get far enough into things to know if there was a direct conflict, but I know that the company I’m an investor in is rapidly evolving their business from what their website says based on customer reactions – and the path they are on sounded very familiar to what I was hearing from my friend.

I raised a yellow flag, paused the conversation, and expressed my discomfort.  My friend knew the company, knew I was an investor, and explained that he thought they were a little different.  But – I wasn’t sure – especially given where I think the company is heading.  I was uncomfortable – and told my friend this – since I didn’t want him to pitch the idea to me in detail unless he was completely comfortable that all the ideas might already be being incorporated into this other business.  In addition, since he wasn’t looking for any particular outcome, I wanted to give him a final chance to back out of sharing his ideas with me at this point.

He concluded – rationally – that we should stop talking.  I felt better, and – while he didn’t get the benefit of my feedback – I don’t think he missed out on much since I expect it would have been an early / preliminary conversation anyway.  While he could have kept pushing me to listen, he knew what he wanted to accomplish (expose me to the idea and get feedback) and – since he had this in mind – realized that the benefit to him was likely lower than the potential cost if the companies were in fact competitive.

As a result, we had a pleasant 10 minute phone call, rather than a 60 minute phone call that – in the best case – would have likely been irrelevant for him.

  • Ralph

    You raise your own warning flag here. Even if he didn’t fully understand the danger/downside etc of continuing the conversation it sounds like you did.

    Why would you not end the conversation whethe he wanted to or not?

  • http://www.feld.com Brad Feld

    Ralph – good question. My guess is that if he had decided to proceed and it kept going where I thought it was going to go, I would have shut the conversation down in another five minutes. In a case like this, I prefer that the entrepreneur make the decision so that he can’t say I was an obnoxious asshole that didn’t want to spend time with him, but I’ll “call the ball” if I think there is a direct conflict. In this case, I didn’t have quite enough information, but all my spider senses were tingling.

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