VC "help" = Yellow Alert

When I first started doing the VC biz, I had a basic rule: See everything, never turn down a meeting, always be polite, and never ever pick apart a presentation, just watch the person's eyes and look for the passion.

I waded through some stuff that had no chance of getting VC funding.

Note that I didn't say crappy idea because, in the end, how does anyone really know, right?

If somebody max'd out the credit card, gets a business off the ground that gets them $60,000 salary with satisfied customers, it's not crappy to them.

Then I did a few deals and started doing 6a - 6p days, eating up everything I could and just loving this stuff. I still do.

Then, I got really 'cool' and decided that I would offer advice to all those people wanting to break into the world of VC. 

I wrote/write an article for a local paper, do talks all the time, do this blog, and spout all this stuff about VCs. What we look for, how to do powerpoint, etc, etc.

Well, I think VC advice might be outta control.

I know that Fred Wilson and Brad Field are two senior and very smart VCs in North America. They have done way more deals, know tons more people, and have mountains more experience then yours truly.

Brad has done an excellent job of giving advice about term sheets and Fred also has offered up a number of good comments on the process.

I'd like to humbly take polite and respectful exception to the lastest VC advice offered up by these two gentlemen.

First, Fred offered up his VC Cliche of the week where he outlines a rather strong argument to ditch the word traction. This is one of series of rants about overworked terms, things people shouldn't say, etc. All reasonable stuff, for sure. 

Then Brad came back with his own stuff to pile on (space and thrilling) and the lovefest (his word) was in full swing.

My concern is that we (the VC community) may be doing more harm then good when it comes to this micro-management of how the company should come into our respective offices.  I think this is a mistake.

After listening to hundreds of presentations, conference calls, pitches, etc, I've concluded that, for me anyway, the slide decks, buzz words, cliches, etc, simply don't matter.

I've decided that I get paid good coin to actually wade through it all and see if the idea can be funded and make a return for my LPs.

What's really really important are three key things.

Passion

Do you believe. Do you really believe. Show me. I had guy tell me about his kids being owed back allowance waiting for the funding because Dad wasn't taking a salary. The whole family was bought in.  Sorry, I'm not taking points off when he says "we are getting traction" vs. here are the press reports and customer feedback blurbs.  The passion and belief is a great start for me.

A problem solved

What pain point is being solved? It's not hard, not complicated to simply say this is the problem and we can solve it.  But if some newbie is taking 50 slides to to get to the point and it's a killer idea with a killer solution (note: add killer to your list guys), then I'm delighted to wade through it while the others might blow this person off. It's wrong/rude and bad for my personal brand to not show them the respect anybody is due that attempts to start a company.

A Market

Simple. Who's gonna buy it, use it, recommend it, and love it.  Yup, they will give us all the logo salad, buzz soup, and over worked terms but so what, that's why we call it due diligence.

The counter argument, of course, will be time. Some won't have time to wade through it. Some firms/funds are too big or too whatever.

I think, like lawyers, when you get big and rich, sucking down the big management fees, you have an obligation to give back. In my view, the give back is like Brad's advice on term sheets or taking the time to do essentially pro-bono work with people who can most use the help. 

To me, the greatest value a successful VC offers the start up world is time. That cup of coffee, phone call, or return email.  We also do ourselves a collective favor by, overtime, educating the start up world on the process. Slowly, friendly, etc.

So, feel free to have 50 page slide deck, with a thrilling presentation about killer products that are getting massive traction in a scalable space which are dynamically changing the convergence of the long tail interactions with VoIP, RFID, Blogs and Tacos.

Come on by, I'll listen.

Comments

[Treogirl]

So, basically what you're saying is that after seeing all of these presentations, you, and other experienced VCs, are able 'thin-slice' through the extraneous and get to what really matters, just as John Gottman is able to know within a matter of moments if a relationship will last. In my opinion, that's probably the most important advice anyone looking for investment capital could recieve.

Rachel

(Gottman reference courtesy of Malcolm Gladwell's "Blink: The Power of Thinking Without Thinking)

[Brad Feld]

Rick - my advice was to VCs, not entrepreneurs! (we're much worse at using vague, non-committal words that mean nothing - even in context.) And of course - the more polished and less soulful ANYTHING is - the worse it usually is (e.g. I agree with your comment on passion.) Ok - I think the word "thrilling" should be banished from press releases, but that's a PR FLACK problem, not an entrepreneur problem.

I'm totally baffled how you could leap from my (and Fred's) commentary to the conclusion / insinuation that we don't spend endless amounts of time with random, unpolished entrepreneurs that show up looking for help. I also don't get how you view it as "micromanagement" as to how folks come into our offices - I couldn't care less how someone comes in - I'm only interested in what substance they have.

That said, I agree with the gist of your comments around what actually matters, but please please please don't make me sit politely through a 50 page powerpoint presentation - just tell me what you do, how you do it, who you do it to, why it matters, and then show me what you've got.

[Rick Segal]

Brad,

Thanks for stopping by. I understand where your comments were directed. The problem/concern is that advice to VCs ends up, typically, as action items for VCs in filtering what goes on with respect how entrepreneurs are treated or as items/hints for entrepreneurs to act upon. If I say to you that I love 5 page slide decks with this, that, etc, surprise, that's what comes into my office. I direct the comment to you, but it's in public (blogs) and that's just what happens.

I've seen and heard from a number of guys/gals that get feedback from VCs that is a result of what "we" are talking about between each other.

In other words, somebody sees banish this or that or make your slides this why or that way, or any VC rant, they spend more time on the polish and less on the stuff that matters.

So, the larger point is that while many of the things you, fred, or I say could be true, they shouldn't be taken so seriously that I end up with a pitch and crew that is so polished I can't tell where the real people are. The idea, I'll figure it out, it's the people I care about.

It's a concern that some entrepreneurs might (and do) take these various comments way to seriously and, in my view, colors them from just coming in and pitching the gig so we can talk about it.

All of the people, including me, tossing out opinions about PowerPoint slides, terms, etc, are in effect "micro-management" if they cause that entrepreneur to spend countless hours tweaking slides or terms based on the myth that in the end you, fred, me or any VC is going to pass on a good idea/team because the deck used a canned template from PP.

I cringe at massive PowerPoint slides, hate it when people read the slides to me, etc, etc, but I'd rather deal with it in the office and give the impression that by arriving in my office, it's not dental work.

I'm also not implying that you or fred specifically do or don't spend time with random companies. Not at all, in fact, I praise your efforts to give the entrepreneur term sheet feedback.

The comment was larger in scope. In my opinion, based on what I've seen in general, I think we, as an industry, should be doing more.

That comment is not linked to your efforts at all.