It's Not Just What You Say, It's How You Say It
The average VC meets dozens of new founders each week. That means dozens of conversations with incredible founders sharing their visions for the future. While most founders focus on talking about their product and market (after all, market matters most to VCs), the investor on the other end of the call is often focused on something different: you.
Over the years, I’ve heard thousands of founders tell me about their market hypothesis, product, technology, team and long-term ambitions. But the reality is, I already knew most of what they were going to tell me from reading their pitch deck.
In our first meeting, I’m focused less on what a founder says and more concerned with how they say it.
Last week, I shared my story of pitching legendary investor Brad Feld and what I learned from that experience. Here are some of the things that I’m watching for in a first conversation:
Founder-Market Fit
We talk a lot about product-market fit, but founder-market fit is arguably more important to investors in the early stages of a company.
As a VC, I want to understand why you chose this particular problem. Of all the things that you could devote your life to, what started you down a path that will potentially lead to you spending the next 7-10 years (or more) on this?
Ultimately, VCs are looking for a passion that goes beyond just numbers. Far too many founders I meet have thoughtful business plans and product roadmaps, but can’t articulate in a convincing way why they’re doing this instead of any number of other things (beyond money). As a former founder, I know how hard things get and how lonely and exhausting the CEO journey is. I need to have conviction that 5 years down the road, when things get tough, early employees (and potentially cofounders) move on and the level of competition has you feeling like you’re like a back alley knife fight, you’re still going to push ahead because this problem matters so much to you.
The Road Ahead
The founders and companies that attract the most investor attention are, paradoxically, the ones that need our help the least.
VCs are in the business of generating a return for our LPs, which means we’re going to be far more interested in a company whose success seems like an inevitability than one that needs a lot of help. In my experience, this is best reflected in the level of confidence with which a founder talks about the road ahead:
Do you know exactly what the market wants and/or have a plan to figure it out?
Do you know where your competitors are weak and how to exploit those weaknesses?
Do you understand how purchase decisions are made in your market and have GTM (go-to-market) ideas that make sense and are realistic to execute?
If you’re in a regulated industry, do you know the exact steps necessary to gain approval and how long each step will take?
Do you know who you need to hire over the next 18 - 24 months and have a plan for finding those people?
Do you know what your blindspots are as a founding team and have a plan to solve for them?
Do you know what milestones you need to achieve in order to unlock subsequent rounds of funding?
I don’t expect founders to have answers to every single one of these questions (especially first-time founders), but I am looking for founders to come armed with a solid plan of what they’re going to do tomorrow, next week and next month.
I’m looking for founders who have supreme conviction in what they’re doing and what it’s going to take to succeed — and that they’re going to succeed with or without my help (though, hopefully, I can help a bit 😉).
Hungry Yet Humble
In my experience, the most successful founders exhibit both the extreme conviction I referred to above and a level of humility that enables them to learn from others and incorporate new information as it becomes available. It’s what I refer to as “hungry yet humble.”
When I speak with a founder for the first time, I specifically ask questions to understand how they incorporate new information:
If I challenge an assertion you made, do you respond in a thoughtful way or brush off my concerns?
If I point out contradictions or limitations in your approach, do you engage in a discussion or retreat to defensiveness?
If I offer a suggestion based on my past experience, do you take note of it, blindly accept it or immediately reject it?
I’m looking for founders who are willing to engage in thoughtful discourse and are capable of evolving their view of the world. You shouldn’t blindly accept everything I say, nor should you become defensive when I ask a pointed question or offer constructive criticism (and you definitely shouldn’t become argumentative). New information will come at you from all manner of sources and it’s essential that you be able to thoughtfully incorporate it into your model of the world.
Team Cohesion
Another thing I’m watching when I meet founders for the first time is how they interact with one another. Are you generally respectful and play to each others strengths? Or do you contradict, interrupt or one-up each other?
Over the years, I’ve seen it all. Cofounders correcting each other, disagreeing with each others’ answers or responding with snipes and micro-aggressions. I even watched two founders get into a full-on argument with each other while all but forgetting that I was in the room.
Once again, I’m not expecting you to be perfect. Fundraising can be incredibly stressful and you’re going to disagree. But I need to believe that you generally like and respect each other and can work together successfully for many years.
No Assholes
This last perspective isn’t shared by every VC (if it were, certain companies would never have had a single investor). I have zero interest in investing in or working with assholes. When Stanford professor Robert Sutton wrote his bestselling book in 2007, I loved it.
But as a VC, I’m in the business of generating a return for my LPs, so my feelings alone aren’t enough.
From a pure returns perspective, I believe that in today’s age of hyper-connectivity and social media, generational companies can no longer be built by people who exhibit or tolerate bad behavior. While there are still some well-known companies led by prominent jerks, I believe that the age of the asshole CEO is nearing its end and that investing in such founders today will lead to poor returns over the long run.
Companies led by assholes almost always self-implode. We’ve seen it over and over again. It will only happen more.
To be clear, this doesn’t mean that everyone should love you or that you should behave like a pushover. It does mean that you’re a generally good person who treats other people with respect. If you can’t do that, you’re going to have a tough time recruiting and retaining people. So, if I get a sense the first time we meet that you’re a jerk, we’re probably not going to spend much more time together.
Some behaviors that will immediately land you in my bad books:
Rude or disrespectful behavior (to anyone)
Being dismissive or talking down to a junior member of our team
Interrupting, cutting off or otherwise disrespecting female members of our team
Argumentative or combative behavior
Racist, sexist, or otherwise inappropriate comments