There's Always Other Money

In reading the NYT piece about the negative experiences of female founders raising, one quote stuck out to me:

"They put up with the comments, Ms. Renock said, because they “couldn’t imagine a world in which that $500,000 wasn’t on the table anymore.”

If you've ever had to fundraise, you can understand this.  It's an extremely vulnerable time where you're getting a lot of rejection.  When you finally get someone willing to fund what by now seems like a crazy idea, especially after all the criticism you've gotten during the process, you get in a mode of pushing for a close.  You're willing to overlook just about anything because you really need this money.  Rent is due.  Credit cards are maxed.  You don't want to lose this fish while it's on the hook.  

That's why so many of these founders went down rabbit holes that, in hindsight, maybe they shouldn't have--and where they have gotten some pushback.  That's why the agreed to meet at such and such time or place, or ignored the first set of comments.  

They felt like this was the *only* opportunity for their company to survive.  

The reality, and what it's important to remind founders of, is that there is *always* other money.  If one investor seriously wants to put money in, there's nearly zero chance that they're the only high net worth individual or VC on the face of the earth that will get there.  You convinced one person, and that means you can convince another.

It's never ever worth having your values take a back seat or not receiving the utmost respect from those who invest in you.  Know that you can move on, and there will undoubtedly be a much better partner for you in someone else.  

In fact, this is where you can use the ecosystem to your advantage.  If you tell community leaders that you got an offer for investment from someone you don't trust or someone that you don't think respects you or your boundaries, so you want to find replacement investors, I guarantee people will be willing to help.  

It's one thing to take time to just help someone raising--it's another to help someone who has had a crappy fundraising experience that no one should have to go through.  Founders and investors alike will point you in the direction of well-respected and professional investors.

Plus, many of the high net worth angels who mistreat founders aren't serious investors anyway--and there would have always been a strong chance that they would have bailed on you before the finish line.  

Why hasn't anyone else funded this?

This is the worst question a VC can ask.

It presupposes that the only good deals are the ones they can't get into--which is an odd way to think about the world.  I suppose the only club deal they would want to get into is the one that doesn't want them as a member.

There are lots of examples of huge deals that could have been had by anyone early on--Airbnb, Casper, Uber, etc.

And there are even more examples of oversubscribed companies that flopped.  

In the seed round, there seems to be little to no correlation between the "hotness" of a deal and its eventual success--and even less so with the returns.  Hot deals get bid up.  Prices go up, and returns go down.  The more you pay, the less you make.  It's simple math.  

Yet, so many investors--those who tout their networks and ability to see things early--question how they got to something first, or why it hasn't been scooped up already.

Weird, no?

Could you imagine them pitching to their LPs?

"We see the best deals--they're so good, they're already taken and we couldn't get in."

I wonder if this is the same conversation they had with their significant others the first time they met.  

"Why are you single?"  

Glad they weren't trying to adopt children...

"How come no one wants this baby?"

House hunting must be difficult...

"You mean, the people who lived here before don't want it anymore?"

Happy Fundraising!  :)

A Call to Brains: Can We Mobilize Education Like Manufacturing in WWII?

"In May 1940, Franklin D. Roosevelt called for the production of 185,000 aeroplanes, 120,000 tanks, 55,000 anti-aircraft guns and 18 million tons of merchant shipping in two years. Adolf Hitler was told by his advisors that this was American propaganda; in 1939, annual aircraft production for the US military was less than 3,000 planes. By the end of the war US factories had produced 300,000 planes,[2][3] and by 1944 had produced two-thirds of the Allied military equipment used in the war." 

- Wikipedia

Never before and not since then had any country mobilized itself, and so dramatically reshaped its economic focus, around a singular focus.  The ability of the US economy to churn out the mechanisms of war at such a scale in such short order changed the tide of history.

Today, we face different kinds of threats--and while we hear of stories about bombs and guns--the real wars are being fought with ideology, the environment and technology.  Our everyday lives are being threatened by lone wolves influenced by words, hackers who need nothing more than an internet connection and never have to touch a gun, and our own fragile planets inability to recover from what we've done to it over the years..

If someone has an explosive backpack, you can't stop them with a tank.

No bullet in the world can stop a hacker from breaking into our most vulnerable of systems.  

And floods?  Good luck with your missiles.  

These threats are only stopped with raw human intelligence, ingenuity, and yes, the ability to reach across cultures and connect with people as fellow humans not separated by borders.

Smart people are our last line of defense.  Kids learning to code or learning Arabic are going to do more good than kids learning how to shoot--and yet, intelligence is under attack in our society.  The same politicians who champion strength and defense are making the most destructive cuts to our best weapon against our enemies: education.

At a time when we should be undergoing the most massive mobilization of human intelligence we've ever seen--we've got a government trying to build more bombs and guns at the expense of every other social program to improve ourselves as a nation.  

Could you imagine if, at the onset of World War II, Roosevelt called for more shovels and barbed wire to dig trenches?  Or bows and arrows?

That's what we're doing if we're not making sure that we win the race to produce the most computer scientists, the most impossible cryptography to break, or the best solutions to combat our changing environment.

Exponentially spending on education should be seen as patriotic in the way that increasing industrial output was in the 1940's.  Rosie the Riveter should be Rosie the Programmer.  The GI Bill shouldn't just be paying for you to go to college if you sign up to shoot a gun--it should pay for your education if you sign up to protect our cyber infrastructure or learn the language of our enemies so we can gather intelligence.

We need a serious public commitment to getting smart as a country in the same way we committed to being strong over three quarters of a century ago.  Instead, we're rehashing Hillary's e-mails, fighting on Twitter, and trying to win meaningless political points instead of solving our biggest issues.  

How in the world did we get to the point where being intelligent was partisan?  

We're not the smartest country on earth--and we're not the country with the most PhDs, coders, scientists, language experts, etc., and that should put the fear of God into us the same as when we weren't the country with the most nuclear weapons.  Whether you're a Republican or Democrat, if you can't see the writing on the wall that this country isn't well prepared at all for the threats of the next 50 years--and that those threats aren't threats of military takeover, then I don't know how to even begin to have this conversation with you.

You Can Hear the Desperation When They Pull the Trigger: Gun Control or Empathy

I didn't grow up in a neighborhood where gunshots were a thing--and I know I am incredibly lucky for that.  That's why when I pulled up to the corner of Atlantic and Fourth by the Barclay's Center yesterday at a couple of minutes after 2pm, the sound of gunfire was pretty startling, and it's not something I can easily shake.

Pop!  Pop!  Pop!  Pop-pop-pop!  Pop!

I knew what it was right away.  

A car or motorcycle backfires once.  Construction noises are mechanical and repetitive.  Fireworks go off with a kind of chaotic randomness that you only get when timing is dictated by the burning of a fuse.

These pops had intent, and moreover, desperation.  You hear it in the cadence.  Those three quick squeezes in broad daylight on what is perhaps the busiest intersection in Brooklyn can only come from someone who has long stopped caring about the moments after their actions.  

I was glad to be on my bike because I was out of there immediately.  Whereas my first instinct in many instances might be to help--I was one of the first on the scene when I paddled out in a kayak to the helicopter and plane crash over the Hudson quite a few summers ago now--guns change the game.  Guns are to be run from--unless you're in unfortunate enough proximity to be closer to grabbing it than you are to getting away. 

I got away and called 911, and flagged down some MTA police on Hansen Place as well.  

This post isn't intended to say we need gun control.

It's to say that if you have any logical thoughts in your head, a desperate person with a gun presents a relatively simple choice for society:

If you don't believe that babies are born pure evil out of the womb, then you have to concede that either the problem is the gun or the desperate person.  This is a person consumed with so much fear, hate, frustration, etc., that they believe that ultimately, the risk of throwing their whole life away is worth pulling the trigger.  If you pull a trigger, chances are you're going to get caught or killed.  

So if you don't mind the guns, then what are you doing to address the person?

At one point, this person went down a path that conceivably could have been avoided with some help.  We know that--and we know the root causes.  Maybe they had an unaddressed mental illness.  Maybe they grew up in a family decimated by unfair criminal justice policies and lacking in positive role models.  Maybe they lacked economic opportunity, and turned to crime out of financial desperation--that they saw that the upside of theft or drugs calculated out to be higher than a life on welfare or in homelessness.

Sure, not everyone who deals with this winds up in a life of crime.  That doesn't make the people who do purely to blame.  Not everyone who eats spoiled food gets sick--but you don't blame the sick people for not having iron stomachs, you blame the restaurant.  You don't just enact policies to penalize restaurants either--you give them little hand washing signs for the bathroom, you inspect food along the supply chain.  You figure out the root causes and work on preventing them no matter how far up they go.

We know, factually, that all of these things contribute to crime--so if you want to prevent this from happening again and again, and you're not going to blame the gun, then you've got to enact policies that have way more empathy for people than the system currently does.  

You have to decide, as a society, that we're not going to let anyone get to the point where they think the solution to any issue they have is to start shooting in broad daylight in a busy intersection.  You'll decide that you'll teach kids anger management, communication, and give them skills that make them productive in society, not forgotten by it.  You're going to fix the issues that create havoc and desperation in people's lives--like getting bankrupted by a health issue or having an unstable housing issue.  You'll treat addiction for what it is--a disease--rather than a crime.  

That's what I can't reconcile about most of the gun rights defenders.  Their policies seem to align with not providing any services or social safety nets to people.  It's like, "We know your world sucks and is full of pitfalls that other people don't run into, but still, we're not only not going to do anything to help you, but we're not going to do much to curtail the guns that exacerbate these issues."

At this point, it doesn't seem worth arguing about whether guns should be a meaningful part of people's lives--but I hope we can all agree that desperation should not be.  Throwing people in jail and losing the key doesn't solve for the desperation component, but we know what does. 

So if you don't have a policy of gun control, I look forward to hearing about your support to increase funding for education, housing, physical and mental healthcare, and worker protections.

The Rainy Day Fund of Reputation

One aspect of venture capital that rarely gets talked about is competition to get into a deal.  

What happens when a founder has that rare wealth of riches when they're choosing who they're going to allow onto their cap table?  The tables turn and the one being pitched to becomes the one pitching.  

The moment when you find out that you're not guaranteed a slot is my least favorite as a VC.  I've seen different investors react to it differently.  Some are really competitive.  They want to "win" a deal--by beating out others.  

Personally, I don't like being left out of the chance to work with really great people on big problems worth solving.  I love this job so much and like seeing other people succeed that I have serious FOMO not to hear those stories firsthand and be able to make those hiring intros, pitch a reporter, or ask the right question at the right time in a board meeting.  When it all works out, it's amazing--and when it doesn't, it's really tough, but challenging in the best of ways.  

At the end of the day, however, a VC's money is just as green as the next one--which is where your reputation comes in.  There's nothing I can say or do at the moment of offering to invest that is more convincing than the sum total of what not only the fifty plus founders I've worked with beforehand have to say about me, but the countless others I've run into as an investor.  I take 150+ pitch meetings a year, and probably do a speaking thing every other week if not more.  

That's why it blows my mind when VCs are standoffish or disrespectful, or even worse, dishonest.  The reputation you create off of each 1:1 interaction with a founder is like a rainy day fund.  Every time you truly help someone, even if you don't back them, is a small deposit.  It's a founder being willing to say something nice about their dealings with you or to recommend you to a friend.

Helping every founder is an impossibility.  Sometimes, you just can't stick around one more minute at an event.  You've got friends or family waiting--and sometimes, you just need to put the e-mail down.  You can't get to that one founder that keeps pushing themselves back up to the top of your inbox, because you have four term sheets out and you're trying to help someone close a round, and someone else hire a COO.  You can't get to everyone, but you can respect everyone you did get to--and act like you know that as hard as you're working, they're working even harder.

Every time you slip an obnoxious term into a cap table, or take six positive meetings before ultimately passing for a reason that should have come out in meaning one, you're debiting your rep.  That's going to come back.  Maybe someone might actually ding you, but you're not going to have a founder go out of their way to recommend you either.  

Founders are making incredibly important decisions when they decide what investors to take.  They're literally stuck with this group for the duration of their company--and there is going to be no one they'll trust more for a recommendation than another founder.

So, as you're building your career, treat every founder as if they're going to talk to that one founder whose company is 3x oversubscribed--the one you think could make your career if only you got a shot to participate.