VCs with Personalities? Foundry Group FTW!

Posted on Sep 14, 2011 | 56 comments

VCs with Personalities? Foundry Group FTW!

I was an entrepreneur for years. I must have pitched 40-50 VCs over the years. Possibly more. As I talked about on many occasions when I was an entrepreneur – and blogged publicly about – I learned a lot about my business and myself in these meetings. It was largely a positive experience.

[Make sure to watch the video]

Still, it was bloody annoying, too. Blackberry’s in meetings, last-minute cancelations, partners who no-showed but send junior staff, lack of imagination / engagement, etc.  I wrote about it all in that post.

But I’ll tell ya – even that I kind of just accepted. I realized it was part of the process because it’s such a high-volume activity being a VC. I figured I wouldn’t let it get me.

What surprised me was how seriously many VCs took themselves. You’d see them speak at conferences using their favorite euphemisms for businesses that grow rapidly or for really profitable businesses. Or they’d speak in the fine-tuned VC lexicon to you. Knowingly. Like they’d seen it all before. You know, things like, “we’re looking for businesses with high viral coefficients,” “we want to see non-linear growth,” “what are your unfair advantages?”

Or they’d throw out their standard, ‘I’m too bored to think up anything insightful’ questions like “what’s going to happen when Google copies this?” or my favorite, “how big can this get?”

It’s almost as though they lacked personality, originality, empathy, humility or a sense of humor.

That’s what makes Foundry Group so refreshing to me. Aside from having one of the best performing funds in the entire country (I’ve seen the data) they’re a down to Earth group of guys. They’ve been blogging for years, written several books, helped found TechStars and have now produced an awesome video taking the piss out of VCs (and themselves).

You won’t find many guys in our industry who would do that. It’s an awesome & short parody. Best line: “we’re a definite maybe.” Best video moment: the Justin Timberlake impression. I’ll let you find out what I mean. I also loved the guest appearance by Dan Primack of Fortune Magazine.

I’ve often said that it’s important to have great rapport with your investors because you’re stuck with them. Life’s too short to work with Dicks. And if you have to spend a lot of time with your investors I can’t imagine a better bunch than Brad, Jason, Ryan & Seth.

Please check it out the short video, “I’m a VC” (Who are You?).

  • James Mitchell

    In the private equity (fka leveraged buyout) world, things are not so clubby. No PE firm would write a post about how great another PE firm is. Obviously they get together for conferences and to share ideas, but when it comes to landing a deal, they all look out for themselves.

    The exception is on the extremely large deals, which are too large for any one fund to handle. Say you have a $10 billion PE fund. You’re not going to invest more than $2 billion of that in any given deal. Since about 25 percent of a purchase price needs to be equity, that limits you to a maximum purchase price of about $8 billion. Which is why for deals much larger than that, usually more than one PE firm is involved.

    If you’re the invesment banker representing the company, managing such a situtation gets tricky. You obviously want PE firms to bid. You want them to cooperate with each other but not to cooperate too much. (For example, what is they all get together and submit just one bid?) It’s a fine balance.

    Interestingly, this tendency to jointly bid on very large deals has led to a private antitrust lawsuit against most of the major PE firms. So far they have collectively spent $100 million in legal fees defending themselves in this lawsuit.

    The fact that VCs are so clubby with each other proves, I believe, that startups investors still hold most of the cards, except in possibly in Silicon Valley and even then, only for certain types of deals. If startup financing ever evolves to more like the PE world (in the PE world, sellers in most cases have almost all of the cards), then VCs, being the rational economic actors that they are and are supposed to be, will, I suspect, be less clubby with each other.

    I found AngelGate to be very interesting. Assuming Michael Arrington is correct, many of the top angels got together to collude on how to deal with Y Combinator and to agree on valuation. For such smart guys to take such a legally risky move (if I were a government prosecutor, that case would be a dream come true) shows they are really worried.

  • Scott Kriz

    Thanks for the reply Brad. I couldn’t agree more that it comes down to the people over the geography. However, I have to assume that more active startup areas have greater competition among the VCs and therefore potentially a better environment for an entrepreneur – or a more confusing environment…

  • Scott Kriz

    Thanks for the feedback James.

    Given your comment it would Foundry Group seems to be much closer to the West Coast than the East coast (literally and figuratively)

    Re: It can be argued that Dropbox’s success can be attributed by a large extent to the board that they were able to get through the Sequoia investment and the funding didn’t make Dropbox work, the leadership and oversight did.

  • Prashant

    Haha, loved the “Dicks” link. Being a first time, fresh out of college entrepreneur I, maybe naively, believe that it is necessary that we have fun while achieving whatever we are out to achieve. I quit my job for the same reason – much formality, less work, even lesser fun. Though the truth be told I believe people in the industry still need to evolve quite to bit to be able to not confuse “having fun” with “being frivolous” (Disclaimer: I haven’t met a lot of people from the industry, being busy with the product, and this is probably a grossly unjust generalization). And this mental block sort of plagues both the entrepreneurs and the VCs. Someone who appears professional (keyword being “appears”) and businesslike will always find takers. It takes practice, insight and humanity to be able to look beyond the apparent and identify the real purpose of a person/team/fund. Its good to know people are out there who are doing that :)

  • Dave W Baldwin

    Give yourself a little more credit.  FWIW, it is proven the ladies like the deep voice.

  • seankelly

    Brilliant! Only thing missing was a DJ. I’m up for it!
    Noted in the comments some got in a flap debating something about not being “professional” .
    Relax. There are plenty on buttoned down firms out there. Pick one!