VCs say a lot of stupid things. I’m guilty of it plenty and whenever someone calls me on it I try to acknowledge and change. One that I try really hard not to do is say “my company” when referring to companies I’ve invested in – I think it’s one of the most annoying things a VC can say.
I was talking to a VC the other day about a few companies he had invested in. By the third time he referred to one of the companies as “my company” (as in “My company is working on X”, “My company would like to talk to Company Z about thing Y”) I felt myself starting to react. I didn’t really have a relationship with this VC, but I knew that he had never run a company (investment banking post college, MBA, then VC). I realized I wanted to stop him at some point and say “dude – it’s not your company – you are merely an 18% shareholder in the business.” I bit my tongue and had the conversation, but I’ve been thinking about this in the back of my mind ever since.
One of the great lines from TechStars is “It’s your company.” That’s the way David Cohen and I remind the TechStars’ founders that ultimately all the decisions are theirs – the mentors (and us) are providing data, feedback, thoughts, and insight – but not telling them what to do. Sure – a lot of our (and the mentors) language is directive (e.g. I just sent an email to a TechStars CEO that said “you should do thing W right now”) but ultimately the decision as to what to do is the CEO’s.
While I’ve got plenty of rights as an investor, I’m very aware that I’m “an investor.” If you are a CEO or an entrepreneur, I can’t imagine anything more annoying than hearing one of your investors refer to the business as “his company.” Now, if the investor owns more than 50% of the company, I guess this is a legitimate legal perspective, but it’s still an incredibly demotivating position to take.
So – to all my friends out there in VC-land – let’s try to change the language. Some of the VCs I respect the most – like Fred Wilson – diligently refer to investments they make as “portfolio companies” (as in “our portfolio company X"). I often refer to them as “our investment” or “our portfolio company”. Regardless of the approach you take, think about the language you use, especially the impact on the people who are working their asses off every day to make “their company” successful.
Sorry if this feels pedantic to you. It’s now out of my head and on this blog so I can move on. As someone I love likes to say “my work here is done.”
I find this very insightful on the your part (as aVC) and appreciate your perspective. As an entrepreneur who has led several startups and collaborated with VCs and Angel investors it can be very annoying to hear them refer to their investment as “their company”. While I sincerely appreciate their investment, involvement and their interest in advancing the business of the company, it’s still my company until it isn’t.
Comment by Kirk Sanders — October 23, 2009 @ 10:23 am
I think that qualifier works just fine. It’s the blanket “my company” that bothers me.
Comment by Brad Feld — October 24, 2009 @ 8:24 pm
I intended no disrespect to the VC who has never run a company. I just wanted to point out how inappropriate I think it is for him to say “my company” when he’s never actually had the experience of running a company. For example, Fred Wilson will quickly acknowledge that he’s never run a company. Yet, he’s very careful to be very respectful about the dynamics between the entrepreneur and the VC, especially with respect to talking about “the company”.
Comment by Brad Feld — October 24, 2009 @ 8:31 pm
As company founders might understand, some company founders might be sensitive on this issue because of having been reminded of the 'Mother Goose' story "The Little Red Hen" where the hen found a grain of wheat and saw the potential, was denied help planting, milling, and making the bread, but, when the bread was out of the oven and warm and fragrant, had eager volunteers to eat it! Ah, it's an old story! Still, the hen, even after 'expansion stage' capital, hearing "my bakery" might have some ruffled feathers!
Of course, she should just smile and think of what her 82% of the 100% all-natural, organic, artisanal, boutique bakery, uh, 'boulangerie', selling lifestyle dreams, status, prestige, approval, envy, and social status to the Chablis, Brie, BMW, Hamptons, Greenwich, and Upper East Side crowds, while they still have money enough for a loaf of bread, along with starch, gluten, yeast, CO2, and Malliard reactions, will be worth after the M&A with Hostess!
Ah, the dough is about ready for the oven — back to work!
Comment by sigmawaite — October 25, 2009 @ 3:00 pm
Brad, its very refreshing to read something like this but I am guessing this happens more often than not. In the entrepreneur/VC world, there is so much ego involved that I think most of us would be an are surprised when an investor didn't say 'my company' when referring to one of his portfolio companies. No, he's not putting in the 86 hours a week the founders are, but as @michaelsheeley said, it is nice to hear your investor attach himself to your sweat and tears. And most likely it is creating more awareness and credibility of the company. But three times in a conversation is pretty annoying.
Good post.
Comment by Matt Filios — October 25, 2009 @ 10:50 pm
Gotta disagree. If he owns any % that makes him an owner and gives him the right to say "My Company". Granted he is not a controlling owner but so what? Employees might not own any stock and still refer to their employer as "My Company". Nothing wrong with that. It indicates a strong association/identity with the company. A bigger concern for the VC is that the choice of words "My Company" may mean he has too much attachment to the company to sell.
Comment by Chart — October 26, 2009 @ 6:51 am
[...] It’s Not My Company – Brad Feld [...]
Pingback by Today’s Startup and Entrepreneurial Updates | CenterNetworks — October 26, 2009 @ 3:47 am
I’m actually completely fine with employees referring to a company as “my company” – and I encourage it. It just feels very different to me when a VC says it.
Comment by Brad Feld — October 26, 2009 @ 10:59 am
[...] * Hey VCs: Remember, it’s not your company [...]
Pingback by peHUB » peHUB First Read — October 26, 2009 @ 4:38 am
What's different about a VC saying it? Ownership is ownership even if it is only 1 share of a big entity.
Comment by Chart — October 26, 2009 @ 1:09 pm
I think its all in the delivery.
Somebody posted a while back that it took them less than a minute to figure out what kind of VC they were talking to: One that viewed themselves as one part of the entrepreneurial community, and the other that viewed themselves as an emperor that because they had the money everybody needed to bow in their presence.
So in one case its like saying: "we won" when your favorite team wins.
And in the other its as offensive as referring to a person as a piece of property.
I have no doubt what kind of VC Brad was talking to.
Comment by Phil Sugar — October 26, 2009 @ 1:44 pm
VC's also need to remember that it is not "my company" because it's not "my money." Too often, VC's forget that the money you manage is not yours, but is students (endowments), charities (foundations), retirees (penioners), and individuals. So ownership of a company is further removed from a VC b/c it is 1) not your company and 2) not your money. We need a serious attitude check in the VC community. The arrogance (often, not always) is tiring, particularly when 98% of VC's have done nothing for 10 years, regarding returning some of that money to your investors.
Comment by Concerned LP — October 26, 2009 @ 2:43 pm
You're taking the phrase out of context. There is no implicit arrogance or overinflated sense of self importance when a VC says "my company". We know exactly how much we own and we know we are usually far from the most important player. Within a partnership, while we share in each other's successes and failures, we each take ownership and responsibility of our own portfolios. It's within this context that "my company" makes perfect sense. Outside of partner to partner discussions we're really saying "my [portfolio] company". It's really kind of silly to try and read into it beyond this.
J
Comment by JGB — October 26, 2009 @ 5:47 pm
What you know isn't necessarily what others see. If you're being constructive, "we" and "our" are very good words to use, and they do make a difference. Whether you read into it or not, others do–not least the people who work to build the company you're funding.
Comment by Joseph Logan — October 26, 2009 @ 8:58 pm
Joseph, I certainly take your point but think about what you're suggesting. The issue isn't that VCs talk to a founder and describe his/her business as "my company". Even the most egotistical of the pack wouldn't be that offensive. The issue is when talking to someone not involved in the business that VCs often talk about "my company". In this context its nonsensical to use "we" or "our" unless the CEO or entrepreneur is standing next to you (which they hopefully are not most of the time).
Someone may have used this analogy already; but if I was an entry level software engineer or bench scientist at a start-up and the company successfully raised a bunch of money, you would have no problem if I told a friend or a group of people that "my company" raised a $XXM. What's the difference here? Again, its really very silly to scrutinize this.
Comment by JGB — October 26, 2009 @ 10:28 pm
Take your points as well, JGB (isn't civility a wonderful thing?). The fact that there are 43 replies on this thread, though, and that Brad wrote about it in the first place tells me it might not be so silly to scrutinize it after all, though I think it would be silly to obsess about it. Perhaps it's the way "my company" is expressed.
There are two reasons I think it isn't silly to scrutinize this:
1. Employees in a company can be motivated and demotivated by the behavior of the funders. If I have invested months/years of my life and sweat equity into a company and a guy who bought 18% six weeks ago called it his company, I might not say a word, but I might take it as a subtle cue about who's running the show. Again, whether it's true or not, perceptions matter. This comes up in talks with the founders I work with.
2. More to my own background, when I was the potential buyer for commercially-oriented start-ups, I listened closely for cues about who makes decisions and what the relationship with a company might be like. Were I to hear that those at the center had anything less than complete psychological ownership, I wouldn't take the chance on them (and I have been in that situation). If an established business takes a chance on a start-up, they need to know whose company it is and what that person's integrity is. They want to know that the company will be there, and that it will follow through. It's the founder and team that convey that. Again, it might not matter to some, but the language creates a perception that leads to an action. It's subtle but important.
Comment by Joseph Logan — October 26, 2009 @ 11:00 pm
I totally agree with MichaelSheeley. If an investor refers to a company I've founded as "my company", then I'm excited that they are married to the company and it's future. However, there are always those investors out there that when they say "my company" they mean it with conviction, so much so that they want to dominate.
Being proud of an investment is plausible, being controlling is not.
Great post Brad.
Comment by Glenn Matthews — October 27, 2009 @ 3:55 am
Good post Brad.
I haven't heard this one too often, thank goodness, but of course it has to affect the people working 24/7 to make the business successful. Professional managers/leaders know that it is critically important to get their team to take ownership…. to be proud of their successes, and to take responsibility for their inevitable stumbles. Professional managers/leaders try to dish out all of the credit to the folks that work for them because this is what keeps people working 24/7 for less-than-market salaries. VCs are actually managing and leading folks as well, and that is why your post should be interesting to folks.
We all need to remember that as leaders, our jobs are to inspire and teach. When we forget that, we can't manage or lead very effectively.
Again, nice post Brad.
Comment by Steve Woda — October 31, 2009 @ 4:55 pm
[...] It’s Not My Company (feld.com) [...]
Pingback by Finance Geek » Mistakes that startups make — November 18, 2009 @ 9:22 am