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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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Don’t Ask For A Referral If I Say No

Comments (17)

Fred Wilson wrote an excellent post last month titled Saying NoI thought of it today when I found myself tangled up an in email exchange with someone I said no to.

I won’t repeat what Fred said (his post is worth reading) but I’ll add to it.  I get tons of inbound email from entrepreneurs (and bankers, and lawyers) pitching new investments.  I take a look at all of them and always try to respond within a day.  I say no to many of them, but I’m happy to be on the receiving end of them (and encourage you – dear reader – to send me stuff anytime.)

When I say no, I try to do it quickly and clearly.  I try to give an explanation, although I don’t try to argue or debate the deal.  I’m sure that many of the things I say no to will get funded and some of them might become incredibly successful companies.  That’s ok with me and – even if I say no – I’m still rooting for you.

However, if I say no, please don’t respond and ask me to refer you to someone.  You don’t really want me to do this, even if you don’t realize it.  By referring you to someone else, at some level I am implicitly endorsing you.  At the same time, I just told you that I’m not interested in exploring funding your deal.  These two constructs are in conflict with each other.  The person I refer you to will immediately ask me if I’m interested in funding your deal.  I’m now in the weird position of implicitly endorsing you on one side, while rejecting you on the other.  While this isn’t necessarily comfortable for me, it’s useless to you as the likelihood of the person I’ve just referred you to taking you seriously is very low.  In fact, you’d probably have a better shot at it if I wasn’t in the mix in the first place!

While I’m concerned about my time, it’s secondary.  I can say “no” a second time (to your request for a referral) very quickly and – if I’m so inclined – I can point you to this blog post. 

Somewhere in a parallel universe, someone trained a bunch of us (probably Networking 101) to always “ask for something” when you hear a “no” (e.g. keep the conversation going, get a referral, try a different question.)  There are cases where this isn’t useful – to you.

  • Me

    Phew

  • Art

    I'm assuming that you have a narrow field of things you invest in and that you know others who invest outside that field. If your reason for “no” was that it wasn't in your investment area, wouldn't a request for a referral to someone else be reasonable?

    I have regularly referred people looking for work to others when I would not hire them myself. We just didn't have a good position for them and I knew others who did. Your claim seems to imply that your judgement on someone is omniscient – which I'm quite certain it is not and that you did not intend that.

    • http://www.feld.com Brad Feld

      Art – you are partly correct. I'm definitely not asserting that my judgment on someone is omniscient. In fact, I'm often wrong (and I say so in the post.)

      However, in contrast to a hiring situation, I don't usually have a good sense of who to refer a specific thing to. For example, I know 50+ people that are making cleantech investments, but I don't know enough about cleantech to have a point of view as to who fits where (nor do I want to spend the time figuring this out.)

      In areas that I know well (e.g. Internet/software) there's plenty of the same dynamic. While something might be outside an area I know and I might know other VCs that might be interested in that area, unless the thing blows me away apriori, I'm effectively endorsing it at some minor level (even if I say “I have no clue but think you might be interested” to the VC I refer it to.)

      It gets worse. Many VCs don't really pay much attention to over the transom emails. So – by making the introduction, it's no longer over the transom. Hence – the implicit (even if I don't mean to) endorse it. Selfishly, if it's not a fit or a stupid idea, then my future “referral credibility” decreases with the VC I sent it to (e.g. Feld becomes a random forwarder, not a forwarder of quality.)

      It's fair to then put this back on me and say “so Brad, you don't want to decrease your credibility with your colleagues by forwarding random inbound around to help entrepreneurs you don't know.” That would be a fair statement.

  • Dave

    It seems like there would be no harm, though, in offering suggestions as to other possible targets. The cleantech example is an easy way out, but I suspect that many people are more on-target with their inquiries and the reasons you're not interested are more subtle. Any suggestions you provide (even local firms that are probably NOT targets for the deal) are valuable. That doesn't mean reasearching it, or providing a referral – just possible targets. And unless you know the person it's all that you can reasonably give them.

  • http://www.genotrope.com Tom Summit

    Referrals are the life blood of recruiting, and the same priciple applies. Asking for a referral from the candidate that did not get the job may not be productive. Getting referrals from the candidate that the company likes is very valuable. I wonder how many of the referrals from Art got the job. If the candidate was great you would make a role for them.

  • http://www.b5media.com Jeremy Wright

    Brad, very well timed post ;-)

    We chatted briefly about b5 at Blog World Expo. I knew before (and still do) that it's not your kind of investment (online media). But was going to (today, in fact) see if you knew any media VC's who you felt would be interested in a high-growth online media Series B.

    As Dave/Art said, I thought this was perfectly reasonable (because you, inherently, know more people in the VC industry than I do). But, no worries, the email to you is now cancelled, since I have no desire to clog up your inbox when you're clearly writing this post to avoid just the kind of email I was going to send!

    Thanks for the upfront on this, I know it helps guys like me who've read this blog for ages and always considered that when the time was right we'd ping you to see interest/for a referral :-)

  • gwin scott

    you just have to treat every 'no' on its own merit. in memphis and with our deal flow, sometimes it is important to be more diplomatic, yet encouraging. (at least that is what happens more times than not within our startup/incubator environment and externally). there have definitely been times when ive said no, yet did actually refer them over to another angel, as they might have been interested in funding the deal. i would try to explain my position ie wrong pres/deal looming for too long w/o making any progress/etc….as someone else's perspective might be able to see something i didnt and make it work…

  • http://intensedebate.com/people/me2381 me2381

    Phew

  • Art

    I'm assuming that you have a narrow field of things you invest in and that you know others who invest outside that field. If your reason for "no" was that it wasn't in your investment area, wouldn't a request for a referral to someone else be reasonable?

    I have regularly referred people looking for work to others when I would not hire them myself. We just didn't have a good position for them and I knew others who did. Your claim seems to imply that your judgement on someone is omniscient – which I'm quite certain it is not and that you did not intend that.

  • http://intensedebate.com/people/bfeld bfeld

    Art – you are partly correct. I'm definitely not asserting that my judgment on someone is omniscient. In fact, I'm often wrong (and I say so in the post.)

    However, in contrast to a hiring situation, I don't usually have a good sense of who to refer a specific thing to. For example, I know 50+ people that are making cleantech investments, but I don't know enough about cleantech to have a point of view as to who fits where (nor do I want to spend the time figuring this out.)

    In areas that I know well (e.g. Internet/software) there's plenty of the same dynamic. While something might be outside an area I know and I might know other VCs that might be interested in that area, unless the thing blows me away apriori, I'm effectively endorsing it at some minor level (even if I say "I have no clue but think you might be interested" to the VC I refer it to.)

    It gets worse. Many VCs don't really pay much attention to over the transom emails. So – by making the introduction, it's no longer over the transom. Hence – the implicit (even if I don't mean to) endorse it. Selfishly, if it's not a fit or a stupid idea, then my future "referral credibility" decreases with the VC I sent it to (e.g. Feld becomes a random forwarder, not a forwarder of quality.)

    It's fair to then put this back on me and say "so Brad, you don't want to decrease your credibility with your colleagues by forwarding random inbound around to help entrepreneurs you don't know." That would be a fair statement.

  • Dave

    It seems like there would be no harm, though, in offering suggestions as to other possible targets. The cleantech example is an easy way out, but I suspect that many people are more on-target with their inquiries and the reasons you're not interested are more subtle. Any suggestions you provide (even local firms that are probably NOT targets for the deal) are valuable. That doesn't mean reasearching it, or providing a referral – just possible targets. And unless you know the person it's all that you can reasonably give them.

  • Tom Summit

    Referrals are the life blood of recruiting, and the same priciple applies. Asking for a referral from the candidate that did not get the job may not be productive. Getting referrals from the candidate that the company likes is very valuable. I wonder how many of the referrals from Art got the job. If the candidate was great you would make a role for them.

  • Jeremy Wright

    Brad, very well timed post ;-)

    We chatted briefly about b5 at Blog World Expo. I knew before (and still do) that it's not your kind of investment (online media). But was going to (today, in fact) see if you knew any media VC's who you felt would be interested in a high-growth online media Series B.

    As Dave/Art said, I thought this was perfectly reasonable (because you, inherently, know more people in the VC industry than I do). But, no worries, the email to you is now cancelled, since I have no desire to clog up your inbox when you're clearly writing this post to avoid just the kind of email I was going to send!

    Thanks for the upfront on this, I know it helps guys like me who've read this blog for ages and always considered that when the time was right we'd ping you to see interest/for a referral :-)

  • http://intensedebate.com/people/gwin_scott2405 gwin_scott2405

    you just have to treat every 'no' on its own merit. in memphis and with our deal flow, sometimes it is important to be more diplomatic, yet encouraging. (at least that is what happens more times than not within our startup/incubator environment and externally). there have definitely been times when ive said no, yet did actually refer them over to another angel, as they might have been interested in funding the deal. i would try to explain my position ie wrong pres/deal looming for too long w/o making any progress/etc….as someone else's perspective might be able to see something i didnt and make it work…

  • http://www.kartme.com/pages/editors_picks Phil Michaelson

    So, you're saying you won't privately "sell" a company while publicly "promoting" that company? Makes a lot of sense :)

  • http://daretocomment.com Ian Greenleigh

    I wonder about this type of behavior (asking for referrals / asking for too much in general) quite often. Have we seen an increase in the last few years of people taking advantage of another's openness and/or kindness? Seems to me that, unfortunately, being trying to stay accessible and helpful after enjoying some measure of success is increasingly a losing proposition. Not that I'd know from experience–I'm not yet successful. Rather, I cringe when I see people asking for things like notes on screenplays, a free plug or a personal endorsement from someone whom they barely know. If I were in your position, I can only hope that I would have as much tact and patience in dealing with such attitudes of entitlement.

    • http://intensedebate.com/people/bfeld Brad Feld

      That’s an interesting hypothesis.  I’m not sure I’ve noticed it more recently – I guess it’s always been part of the landscape for me.  It doesn’t bother me at all and I often get gracious replies from folks saying “they understand” when I send them a link to this post in response for their request to a referral (although they might be saying “I understand, but go screw yourself.”)  Occasionally someone just keeps after it but that’s the edge case.

  • Brandon K

    Interesting. I had several VC’s who said my company was too early for them, and then proceeded to introduce me to great angels who invested. I always tell other entrpreneurs to do the same if their deal is more angel-oriented.

  • http://twitter.com/TheFCJournal @TheFCJournal

    I know you and others in the VC industry do not have much time for each person with a pitch. Would a rejection email with a paragraph explaining why by policy you will not provide referrals deter a lot of second emails? Something as simple as, "Please don’t respond and ask me to refer you to someone. You don’t really want me to do this. By referring you to someone else, at some level I am implicitly endorsing you. I am not interested in exploring funding your deal and the person I refer you to will immediately ask me why I am not interested in funding your deal. You may have more success approaching others without my involvement." (Sorry if I butchered your words.)
    Simply pasting this into your rejections could eliminate a second email from most business-people who have been trained to not take "no" for an answer.

    • http://intensedebate.com/people/bfeld Brad Feld

      Interesting idea, although I’m happy to response to the request for referrals with this email (part of the reason I wrote the email was so that I could write one sentence with a link).  I guess if all of a sudden every “no” came with a request for a referral I’d have to refer to something like this.

  • Brandon K

    Interesting. I had several VC’s who said my company was too early for them, and then proceeded to introduce me to great angels who invested. I always tell other entrpreneurs to do the same if their deal is more angel-oriented.

  • Ran Margalit

    I have to say that I pitched an idea I had to Brad. He does not know me personally, and I did not expect much. I got the usual no like most of the people, and I did ask to where to turn.
    Brad game me a list of options for me but, sure, no personal recommendation. I did not expect one.
    I am very glad from the response that I got and of course, I'll be happy for you to invest in me ;)

    • http://intensedebate.com/people/bfeld Brad Feld

      Glad I was polite and at least a little helpful!

  • http://www.kartme.com/pages/editors_picks Phil Michaelson

    So, you're saying you won't privately "sell" a company while publicly "promoting" that company? Makes a lot of sense :)

  • http://www.defragcon.com Eric Norlin

    let me just say that hearing "No" from Brad might turn into something you weren't expecting at a later date. I first met Brad when Andre Durand and I pitched him on funding Ping Identity (http://www.pingidentity.com). He said no. We moved on and got funding.

    now, years later, we work together around Defrag (http://www.defragcon.com) — but "no" was the beginning of our "relationship." ;-)

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