In my limited capacity working in the “venturepreneurial” community here in New York, I’ve come to realize that this industry is built firmly on relationships. Countless VCs have mentioned that warm intros are the price of entry to getting in the door (cold-calling/emailing has a guaranteed 0% chance of success). Chris Dixon has said that early-stage investing is “99% [the person] and 1% [market/idea].” Fred Wilson, who is one of the most prominent (if not the most prominent) person in the New York venture scene, has espoused managing your own personal brand, with emphasis on your online presence. I don’t think that these ideas apply only to the world of venture capital—in fact, I think they apply to the vast majority of other industries where there is any element of human interaction.
So what is the take away? In business that is largely opaque, it’s easy for a few bad apples to spoil the bunch. Stories of VCs screwing over entrepreneurs, citing “fiduciary” responsibility, bathe venture capital in a stereotypically bad light. That being said, when it’s hard to see into an industry and people say one thing and do another, transparency, integrity and honesty go a long way. Great examples of this are the blogs owned by venture capitalists and entrepreneurs alike. Anything that brings greater clarity to the space makes venture capital less scary, and more about interpersonal relationships. When I meet an entrepreneur, the first thing I do is Google them. In the complex formula that ultimately makes a successful entrepreneur, I consider managing your online presence fundamental. If you can’t manage your own online presence, who’s to say that you can create a successful product when so much hinges on creating traction and leveraging its online reputation. On the flip side, if you have a thoughtful blog, your LinkedIn profile is up to date, etc. that’s a good signal, at least for me.
The same advice goes for venture capitalists. When the landscape is mostly entrepreneurs seeking money from VCs (and rarely VCs seeking to get into an oversubscribed round), it’s easy for VCs to exhibit characteristics that will often earn them a bad reputation. Being unresponsive or roundabout is often interpreted by entrepreneurs as negative, when that’s not necessarily the case. As Jeff Bussgang mentioned in his book, time is on the side of VCs and against entrepreneurs—it grants VCs more information to make better decisions, but as raising money is a time-consuming process, it’s best for entrepreneurs if it is as short as possible. But, as a venture capitalist, if you are timely in your responses and honest in your feedback, regardless of whether you invest or not, an entrepreneur will walk away feeling much better about you. A few months ago, Mark Suster wrote a blog posted called “Don’t be a Grin-Fucker.” I’d go further and advise not only that, but maybe just try being a stand-up person. Give respect to get respect.
In the past few months, I’ve had the amazing opportunity to speak with hundreds of people. Of course, every interaction is different, but the ones that stand out most in my mind are when there was no wall between me and the other party. It’s hard enough as it is to have a candid conversation with someone. When you factor in the whole investor dynamic, it makes things ever worse. So when I have a conversation with an entrepreneur who respects me and respects him or herself, that goes a long way. I think that it should be the responsibility of venture capitalists and entrepreneurs alike, as the space becomes increasingly transparent, to take the “douche” out of “fiduciary.”