Venture Forum Culture Clash – a learning opportunity
Wow! One of our liveliest 522 interactions has been triggered by the most recent posts from David (Price) and Jeneca.
The Venture Forum has happened for several years now but the pulsepress voting is a new experiment, so I’m (pleasantly) surprised by the culture clash I’m witnessing – because it offers a learning opportunity.
First to David’s assertion about personality vs powerpoint. He’s talking about the most fundamental social capital: trust. All of us buy lots of things in life without directly evaluating the credibility of the owner/seller/CEO (buying a house comes to mind). But in all of those cases trust is conveyed to us through an intermediate party or process (such as a market or a brand). If you’re trying to acquire investment for a new venture from someone who knows you, trust has already been established, so a personal presence might not be required. And if you’re as famously successful as Steve Jobs was, you can also probably get investment without being present personally. But if you’re looking for new-venture investments from someone that doesn’t know you at all, trust is something that is absolutely easiest to earn when face-to-face. And if you can’t be there physically, you on video is the next best thing.
So I won’t say that it’s impossible for me to start a venture without being actively in-person present in my pitches, but I wouldn’t want those odds. Investors make decisions based on trust, and all of our human senses are most accurately tuned to evaluate trust through speech, body language, facial expression, etc. Sure, there will always be clever con people (can anybody spell “Madoff”?) who seemingly effortless win and abuse F2F trust, but they are aberrations. I’ll put it another way: if you don’t believe in yourself enough to know that you’re the best evangelist for your venture, why should an investor believe it? Nothing breeds distrust in an investor faster than the absence of the evangelist.
On the second point, about “constructive” voting, every venture capitalist I know is very careful to provide constructively targeted questions and comments following a pitch (it is good business, not altruism, because if the person really can correct the mistakes, they’d like to see them again). However, that doesn’t stop them for a moment from saying, “No, I’m not going to invest in this venture now, no matter how much money I have”. It is a clear yes/no vote based on all the information in hand. That is the spirit in which I was looking for you to use pulsepress in the Venture Forum.
If any of you gets only negative votes, I will personally feel very good for you. That’s happened to me lots of times in real venture capital presentations, and it is always extremely valuable because (if I truly believe in my venture) I know absolutely that I haven’t communicated it well enough yet. So I can go back and try twice as hard to find a way to communicate it better. And I’ll typically do that over and over again, literally hundreds of times, before I get it right. Negative votes can’t possibly kill you or destroy your career, but they sure can tell you where you really stand. This is a case where a constructive ‘false positive’ is the worst favour you can do for someone. When you’re truly pioneering something, there’s no value to a sugar-coated wilderness.
So I see this as a clash of cultures. In education we’re taught that learners succeed better when we’re always constructive. But entrepreneurs are continuous learners too, and constructive commentary is always helpful, but the hard yes/no decision is the best feedback they can possibly get. A “no” vote says nothing about how hard you’ve worked, how clever you are, or even how exciting your basic idea is – it only says that the venture isn’t ready yet.
And yes, it may seem harder to say “no” in a social community like this cohort, but it doesn’t reduce the importance or the value of that “no”. An example here is that most entrepreneurs go through a “friends and family round” of investment as they grow. This is clearly a “social” group of investors as well, typically more ready to say “yes” than they probably should be. Most entrepreneurs love f&f investments because they are easier to get, but none should delude themselves that the hardest work isn’t still ahead.
I anticipated we might have some strong alternate perspectives on this, but guessed that the anonymity of pulsepress (the origin of a “no” or “yes” vote is impossible to determine) would help make it work. I’m now guessing that people are voting at the same time they are providing comments, which makes it seem less anonymous.
For my own curiosity, and future 522s, does this matter? For example, if I had asked everybody to comment on the ventures first, then on the last day to put your votes in (so no correlations between vote and voter could be made) would this be better?
Sorry for this very long post – these are some of the most important learnings we could hope for in 522.
Posted in: Blog Café