The Priorities of a Venture Capitalist
I’m baffled whenever I hear from a CEO that he’s having trouble getting a response from one of his VC investors. Unfortunately, this is a very common occurrence in VC-backed company land.
After noticing this during the Internet bubble around the turn of the century (doesn’t that make it seem like so very long ago), I’m starting to notice this again more frequently. As I pondered this the other day, I tried to discern a pattern, but I just think it’s just the way the universe works for some people.
I’ve always thought that my "priority hierarchy" was very straightforward. In order:
- Amy (my wife)
- My extended family
- My partners
- Our employees
- The investors in our funds
- The CEO’s of the companies I’ve invested in
- Other board members of the companies I’ve invested in
- Employees of the companies I’ve invested in
- Everyone else
If you’ve spent any time with me, you know that I handle #1 pretty easily since I love being with Amy. #2 is also easy – fortunately – as my family is pretty functional (yeah – we have our issues like every family, but they are more "entertainment" than "problems.")
Once you get into the work hierarchy, it just seems painfully obvious to me that my partners, our employees, and our investors are the next chunk. Without them, we don’t have a business.
Then comes the CEO’s of the companies I’ve invested in. Notice that there is no "noise" before them. No new deals. No potential investments. No conferences. No baseball or golf games. No boondoggles. No hanging out with other VCs. No … (random other thing goes here.)
All of the CEO’s I work with are excellent on email. As a result, the tempo of our initial communication is immediate. They send me something; I respond almost immediately (worst case – a typical "catch up on email cycle time" which is rarely more than 12 hours for me.) If it requires a phone call, that happens "next" (immediately after whatever I’m doing, as long as I don’t have 1 … 5 scheduled "next". If it requires a face to face interaction, that happens as soon as we can get together.
This seems so simple to me. Maybe I’m missing something but I’m always kind of amazed to hear CEO’s talk about how difficult it is for them to get a response from some of their VC investors.
I think for a CEO that customers and employees should come before investors.
I’ve definitely funded some CEOs that aren’t “email guys.” Not many, but some.
Of course if someone were working on a product that facilitated immediate psychic communication between individuals that would certainly negate the need for cumbersome email.
I don’t respond to email when I’m running either. But yes – I try to clear all my email every day.
Clearly clients and your team should come before shareholders. Shareholders are interested in profits and longevity. Without clients and a solid team you will have neither. I was, rather poorly, trying to display the perspective that in startups and young companies, experienced VCs may be sought out as mentors and partners in addition to a source of funding which would elevate their ranking.
Maybe more VCs should have office hours? Maybe the CEOs could ask for a telephone appt and tell admin they only need 5 minutes of her time.
"All of the CEO's I work with are excellent on email." It seems like CEO's who are excellent on email, get more funding.
Would you ever fund a CEO who took days to reply to emails? Have you?
Your response to #9 is quicker than most peoples response to #1. Everytime I have emailed you, I get a response within a flash. I'm a #9 to you so I think you treat all email as a priority. I am willing to bet that the only time you don't respond to an email right away is when you into a good book. I could be wrong though.
It is quite clear and easy to understand. When you look at it from the CEO perspective, you can see the slight misalignment of priority. Let's assume that most VCs have your priority scale. A CEO is #6 on your list. However, you are #3 on his. The CEO of a startup or young company will seek advice and guidance from the invested VCs and look on them as partners. So VCs would rank as #3 instead of #5 at the investment rank. So a busy or more laid back VC and a motivated and/or impatient CEO would not make a good mix, communications wise. The CEOs having issues should really ask the VC in question what their favorite form of communication is. I hold a CEO position at one of my companies and I utilize skype first and email second as my most used forms of communication.
I also agree with Andrew Hillman. I fall into the #9 category and have not had communications issues with you either.