What's the post behind the post? You could write this about almost any profession - and certainly about founders. What you wrote is true. But what are you really trying to say?
On founders, sure, I think you could mostly say this about them too. And in some ways, founders can be worse, because there are lot of people who start companies with nothing but self-serving intentions. That seems somewhat more uncommon with VCs, actually.
That said, there is a certain clubby-ness to VC that isn't as present with founders. There are a lot more founders; they are dissociated; they don't work together in this overlapping network of co-investments; etc. All of those things make seem to venture capital particularly susceptible to the status game, where, if you're in the club, the people who's opinions you are worried about are other VCs. Are founders worried about other founders opinions? Like, yeah, but in a looser sense.
(Case in point: This post, actually. I orbit around the VC world, and I was more hesitant (though obviously not that hesitant) to publish this post than I would ever be about one that is critical of founders. The VC club is smaller; your access to it is more dependent on status and other people's opinions of you; it's more monolithic. Which, it seems, both creates incentives to be agreeable, but also makes you aware of - and insecure about - your position on the totem pole.)
On what I'm really trying to say, there isn't really any darker subtext. Over the last few weeks, I've heard a handful of stories from folks that all follow a roughly similar arc:
- Someone started a company a few years ago, because ZIRP
- They raised a bunch of money, because ZIRP
- The VC they raised was relatively inexperienced, because ZIRP
- Everyone was happy for a while, because ZIRP
- Now, stuff is coming undone, the company is struggling, and the unproven VCs, who lack 1) the experience to know what to do, and 2) a reputation to withstand a few losses, seem to be trying real hard to, first and foremost, prove themselves as a VC.
To your point, it's understandable, in a way. "Show me the incentives, and I'll show you the result," or whatever. But it's also...bad?
I think most VC have the capacity to be jerks. But I don’t think they want to be. I think you see the jerk behavior if the investment is not going well. A down is, well, a downer for all concerned. So what you may be seeing as you implied with your comments on ZIRP above is that the business cycle and fundraising cycle is in a place right now where there are a lot of companies being squeezed. The VCs, and you can see it in the term sheets, have a lot of tools for doing that squeezing.
Maybe a weird comparison, but a friend recently asked me what I thought of Andrew Cuomo, and my view is that he's not a total empty mercenary, like some politicians who will literally say anything to get ahead. He seems like he *wants* to be a good guy, and he has a working moral compass, but he's also so power hungry and career ambitious and such a narcissist that he can convince himself that whatever he's doing is Actually Good. Which is probably better than not caring at all, though I'm not totally sure of that.
I'd probably say more or less the same thing for most VCs.
I love that you posted this. "You can tell when the confidence is fake, or the bloodlust is real." I think this is pretty much true - but I also think there are a few people out there that are excellent at hiding it... but they can't hide it forever.
Ya same. My best trick here is that people assume other people are like them. So… understand how they think other people will react and you get insight into who they are… this especially comes out in any sort of “deal making.”
So I think that's half true. Certainly, most of the time, a dollar is a dollar is a dollar. But sort of to the point (to the extent that there is one) of this post, who gives you that dollar can sometimes matter a whole lot. Because no matter how mature VC gets, that dollar comes with strings attached, and those strings are attached to people. And people, well.
I don't really know specifics. You hear rumors, but they're incomplete stories, told from one side, and you're never really sure how true it is. When you hear enough of them, it's hard not to see patterns of behavior - like some of the stuff here, roughly - but it's also hard to be so confident in any one story to be like "this specific person did this specific bad thing."
I'm not sure I'd go so far as to call it the playbook. Most of the things I've heard don't feel like things that VCs planned to do, but it's things that they were willing to do. But, yeah, willing to do in a way that I doubt it's much of an exception.
What's the post behind the post? You could write this about almost any profession - and certainly about founders. What you wrote is true. But what are you really trying to say?
On founders, sure, I think you could mostly say this about them too. And in some ways, founders can be worse, because there are lot of people who start companies with nothing but self-serving intentions. That seems somewhat more uncommon with VCs, actually.
That said, there is a certain clubby-ness to VC that isn't as present with founders. There are a lot more founders; they are dissociated; they don't work together in this overlapping network of co-investments; etc. All of those things make seem to venture capital particularly susceptible to the status game, where, if you're in the club, the people who's opinions you are worried about are other VCs. Are founders worried about other founders opinions? Like, yeah, but in a looser sense.
(Case in point: This post, actually. I orbit around the VC world, and I was more hesitant (though obviously not that hesitant) to publish this post than I would ever be about one that is critical of founders. The VC club is smaller; your access to it is more dependent on status and other people's opinions of you; it's more monolithic. Which, it seems, both creates incentives to be agreeable, but also makes you aware of - and insecure about - your position on the totem pole.)
On what I'm really trying to say, there isn't really any darker subtext. Over the last few weeks, I've heard a handful of stories from folks that all follow a roughly similar arc:
- Someone started a company a few years ago, because ZIRP
- They raised a bunch of money, because ZIRP
- The VC they raised was relatively inexperienced, because ZIRP
- Everyone was happy for a while, because ZIRP
- Now, stuff is coming undone, the company is struggling, and the unproven VCs, who lack 1) the experience to know what to do, and 2) a reputation to withstand a few losses, seem to be trying real hard to, first and foremost, prove themselves as a VC.
To your point, it's understandable, in a way. "Show me the incentives, and I'll show you the result," or whatever. But it's also...bad?
I think most VC have the capacity to be jerks. But I don’t think they want to be. I think you see the jerk behavior if the investment is not going well. A down is, well, a downer for all concerned. So what you may be seeing as you implied with your comments on ZIRP above is that the business cycle and fundraising cycle is in a place right now where there are a lot of companies being squeezed. The VCs, and you can see it in the term sheets, have a lot of tools for doing that squeezing.
Maybe a weird comparison, but a friend recently asked me what I thought of Andrew Cuomo, and my view is that he's not a total empty mercenary, like some politicians who will literally say anything to get ahead. He seems like he *wants* to be a good guy, and he has a working moral compass, but he's also so power hungry and career ambitious and such a narcissist that he can convince himself that whatever he's doing is Actually Good. Which is probably better than not caring at all, though I'm not totally sure of that.
I'd probably say more or less the same thing for most VCs.
I love that you posted this. "You can tell when the confidence is fake, or the bloodlust is real." I think this is pretty much true - but I also think there are a few people out there that are excellent at hiding it... but they can't hide it forever.
I guess that's the trick. I'm sure there are some folks out there who I'm convinced are real, but they actually *are* that good of an actor.
Ya same. My best trick here is that people assume other people are like them. So… understand how they think other people will react and you get insight into who they are… this especially comes out in any sort of “deal making.”
I suspect that VC money is a commodity, like a mortgage broker. Trivial. At this point of maturity, time spent in VC is time lost.🙏🏽
So I think that's half true. Certainly, most of the time, a dollar is a dollar is a dollar. But sort of to the point (to the extent that there is one) of this post, who gives you that dollar can sometimes matter a whole lot. Because no matter how mature VC gets, that dollar comes with strings attached, and those strings are attached to people. And people, well.
bestie are you okay 😭
Eh, like I said in this comment (https://benn.substack.com/p/the-second-wolf/comment/70577057), just a bunch of rumors and stuff over the last few weeks (which, apparently, is a thing? https://x.com/devahaz/status/1839850233783623926). But I'm good. I live in Delaware (??) at their moment, and for better or for worse, if there's one place that has no startups* or VCs or any tech of any kind, it's Delaware.
* I guess technically every startup is technically based in a PO box in Delaware.
Come on Benn, spill the beans!
I don't really know specifics. You hear rumors, but they're incomplete stories, told from one side, and you're never really sure how true it is. When you hear enough of them, it's hard not to see patterns of behavior - like some of the stuff here, roughly - but it's also hard to be so confident in any one story to be like "this specific person did this specific bad thing."
So really, it's the playbook, not the exception, and precursor to "not all..." retorts.
I'm not sure I'd go so far as to call it the playbook. Most of the things I've heard don't feel like things that VCs planned to do, but it's things that they were willing to do. But, yeah, willing to do in a way that I doubt it's much of an exception.