As founders-turned-VCs, Aviel and I have always relied on the “golden rule” principle — treating founders the way we wish we had been treated when we were in their shoes — when deciding how to build our own firm here at Founders’ Co-op.
As operators, we were lucky to raise from some pretty amazing VC role models, people like Brad Feld at Foundry Group, Ethan Kurzweil at Bessemer Venture Partners, and Karan Mehandru at Trinity Ventures. But along the way we experienced many of the behaviors Fred’s post talks about, so we know how awful the experience of raising VC can be.
Our first reaction to reading Fred’s post was that, by relying on our own experiences and learning over our 10-plus years and 200-plus early-stage investments, we’ve developed a strong shared view of what our customer experience should feel like. But one thing that really jumped out at us was how bad a job we’ve done at telling founders exactly what they can expect from us.
A wish becomes a promise when you put it in writing. This post is our first attempt to lay out our customer experience promise to the founders we work with, so that anyone we engage with knows what to expect, and so we can be held accountable for failing to live up to our ideals.
In the process of writing this post we realized we had a lot to say on the topic. Since most founders are too busy to read long blog posts, here’s the tl;dr:
– Tell the Truth
– Be Fast
– Give First
– It’s Your Company
– Be Human
For those with more time, here’s what we mean by all that…
Tell the Truth
Success in venture investing is random and unpredictable. Ideas that start out bad often get better over time as founders learn and adapt. Weak teams can get stronger as co-founders come and go. The instinct in venture is to never close a door on a founder or investment opportunity, because maintaining optionality over time is how you get into that one great deal when the time is ripe.
From the founder’s perspective, this makes it seem like every VC is a pathological grin-fucker. Everyone wants to be your friend and nobody will tell you your baby is ugly, and yet somehow they also don’t want to write you a check today, for reasons they can never quite explain in a way that feels true. So you wander from fancy office to fancy office, never knowing where you stand and just wishing someone would be honest with you for once about what they like and don’t like about your team, your company and your opportunity.
Our promise to founders is to always tell the truth. If we like something, we’ll tell you we like it and try to explain the reasons why. If we don’t like something, we’ll do the same. And if we aren’t sure what we think, because we don’t know enough yet and need more time to see if we can get our heads around it, we’ll tell you that too. But we won’t use that last one as a ploy to string you along and buy time to see if something changes that makes us like it more. Which brings us to:
No professional is more time-crunched than a seed-stage founder. Every single function that is staffed by a senior leader and their supporting team in later stages — from product, engineering, sales, marketing, finance, operations, and customer success, to taking out the trash and resetting the WiFi router — is 100% on the shoulders of you and your co-founders. Wasting a founder’s time is stealing their most precious resource, and reflects at best a lack of empathy, at worst a lack of respect.
Between our own fund investing and our years as Techstars Managing Directors, Aviel and I have participated in and coached founders through over 200 seed-stage financings. We’ve seen every possible flavor of time-wasting VC behavior, from never-ending requests for additional “diligence” information (this for companies with typically less than a year of operating history and often no product or customers), to weeks or months of inconclusive meeting requests involving a shifting cast of characters and no clear decision-maker, to outright ghosting without even the courtesy of a polite ‘no’.
Our promise to founders is to never waste your time. Aviel and I are the only people you need to talk to to get an investment decision. If it’s a no, we’ll tell you within 24 hours or we’ll explain why we need more time. If it’s a yes, we’ll tell you we’re headed that way and what we need to learn in the following week or two to make it official. There should never be enough distance between our final answer and our last interaction to leave a founder surprised. And while we have to gather certain information to protect our investors and make sure we understand how you think about your business, we won’t make you do our homework for us, or demand artifacts that no early-stage business should have wasted a minute creating.
VCs like to talk about their “value add”, all the ways in which their help is worth so much more than their money. Some of the biggest firms (Andreesen Horowitz was among the first and has taken it the furthest) have built full-fledged, free-of-charge consulting shops on behalf of their portfolio companies, with huge operational support teams that help with everything from recruiting and business development to culture and training. No matter the scale, the implicit promise is this: “if you take my money, I’ll help you build your business”.
Like Fred, I thought one of the best responses to his post came from Natty Zola, MD of Techstars Boulder and GP of Matchstick Ventures:
Natty’s answer is an elaborated version of Techstars’ prime directive: Give First. Instead of using the power imbalance between investors and founders as leverage, “add value” and earn trust by giving it away.
Founders’ Co-op partnered with David Cohen and Brad Feld to create the Techstars Seattle program back in 2010, one of the first expansion programs in what’s now a global network of entrepreneurial support offerings. Before joining the fund full-time, Aviel helped build and lead the Alexa Accelerator, another Techstars program created in partnership with Amazon’s Alexa Fund to support the global voice and conversational AI ecosystems. We’ve both seen up close how powerfully the “give first” mindset unlocks value for founders and investors alike.
If you’re a founder building a venture-scale company in the Pacific Northwest, in a domain that we know well enough to actually be useful to you, we promise to offer our help before we ask you to take our money. Whether it’s customer intros, recruiting leads, or even connections to other investors, we’ll do our best to show you how we work with founders before we invest, so you can make an informed decision about whether we really are worth more than our money.
It’s Your Company
One of the biggest worries founders have about raising outside capital is the risk of losing control of their own company. And while VC investments don’t usually give investors much say over the day-to-day operations of the business, that doesn’t stop some of them from acting like they run the place.
Running a fast-growing startup is one of the most confusing and stressful jobs in business. There’s always too much to do and not enough people to do it, the runway clock ticks louder every day, and the survival of the business is always in doubt. It can be hard for founders caught up in the daily shitshow to think about anything else. But for exactly that reason, nobody knows more about what’s working and not working than the founders, and nobody will ever care more than they do about the company, its employees and its customers.
Where founders go deep, investors go wide. We’ve seen some version of the same movie play out dozens — or in our case — hundreds of times. The characters and situations may change, but the fundamentals are often eerily similar. But when it comes to making a specific decision about a specific problem in your business, we always trust the founder’s depth and commitment more than our broad-but-shallow pattern-matching ability.
If you take our money, we’ll do everything in our power to help you succeed. We’ll open our networks, share our experiences and act as thought partners whenever you’re facing a tough situation. It’s our obligation to ask questions and share our perspective to help you get to your best decision. The one thing we won’t do is tell you how to run your business — no matter how hard the conversation gets or how strongly we disagree, our final words will always be: “it’s your company”, and we’ll mean it.
We named our firm Founders’ Co-op for a reason. Our theory of change — the one principle that our entire worldview as investors is built around — is that founders: extraordinary, unreasonable, obsessive, complicated human beings, are the engine of all positive change in the world. Truly great organizations aren’t built from clever market analyses and slick packaging, they’re built by small teams of superheroes who “can’t not do” the one thing they’ve set out to do.
This worldview comes with a whole set of corollaries and implications, some obvious, some less so. At the more obvious end, it means that when we invest in you, we’re investing in *you*, not your idea, your traction, your deck or any of the other artifacts that founders are often asked for when performing the strange mating dance of the venture capitalist. It also requires us to look in the mirror at our own quirks and peculiarities, to show up as ourselves in every interaction we have with founders, so that when we choose each other we do so as humans, not as checkbooks or cap tables.
At the less obvious end, a human-centered approach to venture investing means that relationships are forever, potentially spanning decades and multiple companies, through good times and bad. As long as we always do our best, treat each other with respect, don’t betray trust or take advantage of one another when the seesaw of leverage tips temporarily in our favor, our relationship will become an enduring source of joy and strength for both of us.
Signing up for a deep and long-lasting personal relationship may sound like more than you want from your investors, when everyone’s money is the same shade of green and the idea of “VC value add” smells like the typical bullshit that people with leverage use to get over on those still coming up. If so, we’re probably not your guys, and that’s OK.
The way we see ourselves is rarely a perfect match to how others see us. And our behaviors don’t always line up with our ideals. But if we tell you what we stand for and invite you to hold us accountable, it lets as little daylight as possible exist between our intention and your reality. We’re proud of our firm and the work we do, but we’re human too, and if we are thinking of choosing each other, we should both be able to make that choice with clear eyes and open hearts.