
Why I don’t usually meet startups in person (2019) - luu
https://elizabethyin.com/2019/03/08/why-i-dont-usually-meet-startups-in-person/
======
ftio
I feel about this the same way I feel about interviewing eng, PM, and
particularly sales candidates.

Before you pull the trigger on investing, hiring, whatever, you should meet
with candidates at least once __in the way they 'll be performing the job __.
If you 're hiring a cold calling salesperson, you should not interview them in
person — ever. Their performance is going to be determined – on the job — over
the phone, so you should interview them over the phone.

If you're hiring a remote developer, you should interview them remotely. The
inverse is true as well: if you're hiring someone to be in the office every
day, interview them in the office.

Same goes for investing. How are are you going to be primarily interacting
with this team? If you're interacting primarily remotely (e.g., _not_ in the
context of a shared-workspace startup incubator), you should feel comfortable
interviewing remotely as well. It'll give you a better sense of how your
interactions will go in the day-to-day running of the business.

The author's view on using in-person meetings as a way to get a 'feel' for a
person resonates with me: it sounds appealing, but it introduces an additional
opportunity for bias relative to talking on the phone or even over VC.

~~~
nradov
Where is the evidence for your approach outperforming the alternatives? Hiring
is highly subject to confirmation bias. And the false negative results are
never quantified.

------
ilamont
_In the venture community today, we reward “visionaries” much more than
executors. And a big reason for this is that we make investment decisions
based on pitches rather than on execution (aka working) in our decision-
making._

Another reason is everyone wants to back the next Steve Jobs, and if you don't
have those Jobsian traits, you fail the investor pattern-matching test.

Some startup CEOs know this, and have really perfected the VC signaling down
to choices of clothing, speaking styles, and shitty treatment of (some)
employees.

I heard something similar from an older advisor at the MIT Venture Mentoring
Service. He said something to the effect of, "if you're not raring to go" and
"your board has to practically hold you back" then investors wouldn't fund
you. He was probably right.

~~~
pavlov
_> "have really perfected the VC signaling down to choices of clothing,
speaking styles, and shitty treatment of (some) employees"_

Elizabeth Holmes of Theranos comes to mind...

~~~
ashtonkem
One of the more funny aspects of human psychology is that when someone
perfectly matched their signals to a very specific audience, it looks
_ridiculous_ to anyone not a member of the target audience.

Holmes is possibly one of the most perfect example of this. To any non-VC it’s
obvious that wearing a black turtleneck is not a necessary precondition to
being the next Steve Jobs, but the VC and media commentators fell for it hook
line and sinker.

~~~
icedchai
It has little to do with the turtle neck. Read the book or watch the
documentary.

Elizabeth Holmes was born into money. Her family had connections. One of her
first investors was a well known VC and neighbor. All you need is a couple of
connections like that to get credibility.

~~~
Talanes
The point about it looking ridiculous to outside observers still stands.
Connections buy you credibility within the connected groups.

~~~
icedchai
You are right: her turtle neck (and fake voice) were both ridiculous.

------
Animats
_" In the venture community today, we reward “visionaries” much more than
executors."_

The former CEO of Better Place comes to mind. Blew through most of a billion
dollars, accomplished very little, went bankrupt. But he's tall, very good
looking, and a great speaker.

~~~
cosmodisk
>But he's tall, very good looking, and a great speaker.

Never heard of the guy before.Googled to see how well he does public speaking
and landed on some TED talk. If I'd talk like him,I would have became a
millionaire quite some years ago. However, some of the stuff he says,may have
sounded smart in 2010 but today it sounds like complete tosh.

~~~
Animats
That's him, all right.

------
jrockway
I like the idea of taking notes and then making your decision based on the
notes. That's how the Google interviewing process worked, and I think it
emphasizes the things that matter and lets you filter through the things that
don't. People have a laundry list of things to do in an interview to hack the
system: what you wear, what kinds of follow-up questions you ask, etc. None of
those things ever make it into the notes. Only your thought process as it
applies to software engineering ends up in there.

To some extent, this really mirrors how we buy consumer products. We read a
bunch of experiences and data collected by other people, then make a decision
based only on those written notes. Meanwhile, enterprise products are sold by
who buys you the best golf outing or who sends you the nicest holiday present.
If you remove that source of bias, only the facts stand out. Could be a good
technique to apply more widely. Do you want the product that has the best
experience from other users, or do you want the one that buys you stuff every
few months? As the purchasing manager, of course you want the kickbacks. But
the company itself probably wants the one with the best user experience.
Something to think about.

~~~
cutemonster
> making your decision based on the notes

And can wait some days in between too, to better forget the in person
impression

------
LegitGandalf
Yep, it doesn't matter in the slightest how charismatic the founder is if
their product isn't going to get traction.

I mean, rate founder charisma versus these things:

* Chaos in product - whenever consumers try the product, it bites them

* Packaging misfit - founder drove an IOS app out when market really needs a web experience

* Product lacks rarity - Founder is driving a new iKnockoff when there are scaled competitors already penetrating the market

The list of things that are more important than the founder's charisma goes on
and on.

Frankly the charisma at the helm is really more applicable when the company is
fully established and has a fan base. For a startup, if the product needs
someone charismatic to get traction, hire someone charismatic to sell it.

~~~
icedchai
If you think it doesn't matter, you've never been around someone with real
charisma. They can BS their way into anything, especially investor wallets.
This charisma is actually most useful _before_ the startup has a product. Once
the rubber meets the road, those lofty forecasts and powerpoints full of
fiction are less useful.

------
jariel
Visionaries get other people to act, and that's important.

WeWork is not a real company, built on Koolaid. This is the paradox. Without
the founder's BS it likely would not have happened. Though his forecasts were
rubbish, there was (and is) a material, underlying business.

It doesn't take an extrovert to pump the Koolaid a lot of awkward people have
kind of a stubborn/lack-of-self-awareness kind of focus, and their own self-
belief gives confidence to others.

I think it's rare that successful companies are built without a little bit of
'stupid confidence'. Which at first glance is a paradox, but not once you
think about it.

~~~
logifail
> Visionaries get other people to act, and that's important.

Good visionaries can certainly get people to act in good ways.

It appears that there are other kinds of visionaries who get (good?) people to
act in bad ways.

------
daenz
>This top female VC, however, realized that, although she was more excited
about the male founder’s pitch, when she objectively thought about what he had
accomplished, she realized it wasn’t much. And that the female founder had
knocked it out of the park although her storytelling wasn’t as amazing. This
story is a true story and this happens all the time in venture.

Aren't VCs also investing in companies that they are betting can raise more
money down the road? If you invest in someone who persuades you at a "gut"
level, you're taking into account that they will also persuade others at a gut
level.

~~~
ShrCul
But if their product is mediocre then it doesn't matter how many investors
they pull in. In the long term, would they actually make a significant amount
of money when customers aren't that attracted or satisfied?

------
jayparth
We met with Elizabeth virtually (didn't like the idea but wanted to invest if
we pivoted.) Very fair process & a sharp person to boot- I don't think we lost
anything over an in-person meeting.

------
bobloblaw45
If I had the money I'd secretly get employed at startups I was interested in
to see if they were just a bunch of jokers or not.

I'd do this is because if I were that rich then I probably won the lottery and
stupidly quit my job without thinking and would probably be very bored.

~~~
mtnGoat
i know a person who did this. he wanted to acquire a company and asked to be
hired on for 3 months before it was announced. This way he had time to figure
out who was good, who was awesome and who was toxic.

~~~
watwut
Sounds a great way to make employees to perceive you as dishonest from the
start.

------
rexreed
Unpopular opinion: it really doesn't matter what VCs do or don't do. Most VCs
dreadfully under-perform the market. The rate of VC success is mostly related
to chance or some unfair advantage in getting into early winners. Most VCs are
awful. Meet with them in person, not in person, it doesn't matter. I treat
advice from VCs pretty much the same as a random money manager. Maybe what
they're saying makes sense, maybe not, but it doesn't deserve any heavy
weight.

The 80/20 rule applies heavily to VCs. A very small number of VCs are
responsible for the majority of returns. The rest are just chasing deals
around. Chase in person. Chase not in person. It really doesn't matter.

~~~
networkimprov
This page has a chart comparing S&P 500 to other modes. Looks like VC tracks
it rather closely.

[https://www.toptal.com/finance/venture-capital-
consultants/s...](https://www.toptal.com/finance/venture-capital-
consultants/state-of-venture-capital-industry-2019)

Sorry, couldn't find a chart giving just the bottom 80% of VCs :-)

~~~
rexreed
This chart shows that only 5% of the VCs are generating most of the returns,
and 50% of VC firms can't even return the capital that's invested in them:
[https://techcrunch.com/2017/06/01/the-meeting-that-showed-
me...](https://techcrunch.com/2017/06/01/the-meeting-that-showed-me-the-truth-
about-vcs/)

From the article: "“Ninety-five percent of VCs aren’t profitable,” he said. It
took me a while to understand what this really means."

Basically, the default mode for VCs is to either lose the money investors put
in them or modest returns, which isn't particularly good given the risk of the
investment class. 80%+ of the VCs you'll talk to underperform the S&P. Those
general returns you see? They come from a handful of VCs, who will be much
more selective. Basically you can't approach them, they'll approach you since
they know they are the kingmakers in the industry.

* Also, check Slide 14 in this deck: [https://www.slideshare.net/gilbenartzy/money-talks-things-yo...](https://www.slideshare.net/gilbenartzy/money-talks-things-you-learn-after-77-investment-rounds)

\- The Top 20 VC funds, which represent 2% of all VC Funds, generate 95% of
all VC returns \- 50% of VC firms return less than 1x of invested capital \-
An additional 35% of VC firms return less than 2x of invested capital

So yeah, it's even worse than 80/20 rule. 9 out of every 10 VC firms you talk
to will most likely be loser funds that don't generate substantial returns.
Focus on the top 20 VC funds if you want to be in with the real winners. For
everyone else, they're just money managers, mostly losing their investor's
money, but pretending like they're kingmakers.

~~~
sk5t
Do you feel it's the VC's responsibility to carry you and make your startup
successful? Or is their role to provide funds, and possibly some introductions
and guidance, and let the chips fall where they may?

~~~
p1esk
I think he meant “don’t give money to VCs, not “don’t take money from VCs”.

------
Leary
I would think that an in-person meeting could be substituted by videos calls
in the current circumstances, but that phones calls/emails are inferior given
the information bandwidth is a lot narrower.

There are lots of different kinds of charisma and they interact differently
with a company's potential depending on the business models. For example, a
highly technically competent founder may in itself be very charismatic to
engineers.

------
julianeon
I was curious, after seeing this in the article:

> “Contrarian perspective here – it’s ok to _not_ meet a founder in person
> before deciding to invest.”

> This set off a tweet firestorm — mostly with people telling me in some form
> or fashion that I was wrong.

I decided to look on Twitter to see more about the controversy, and while I
couldn't find as many VC's discussing it as I remembered (maybe some are shy,
maybe some use different words than I used in my search), you can see the
varied responses below.

It seems like Andreesen's investment in Clubhouse may have been a watershed
moment also - legitimizing remote investing for everyone else.

[https://www.mediazed.com/vc-not-meet-in-
person.html](https://www.mediazed.com/vc-not-meet-in-person.html)

------
artsyca
When you create a corporation, you're essentially creating a society
(remember: culture is the foundation of society and society is the foundation
of civilization)

You can model your society in any way you wish but the intention ought to be
to make your society more competitive and capable than the default (i.e.
society at large)

The socialist system is something along the lines of 'from each according to
his abilities to each according to his needs' but that has never worked out in
practice.

There are other systems but the capitalist system ('to each according to his
investment, from the collective pot') is close but we mistake what investment
is and we drastically misunderstand how to maximize the collective pot.

The whole VC system as it currently stands is a symptom of our distorted view
of what investment is and the breakdown of trust required for people to truly
maximize their returns, nothing more.

VC's bring money to the table and it seems that this buys them enhanced
privilege compared to people who bring other sorts of investment. The minute
you begin the VC conversation you begin devaluing the investments of people
who bring other sorts of investment (i.e. faith, effort, opportunity costs)
and create a sort of toxic feedback bubble whereby the entire system goes off
the rails because apart from the money the VC's are hardly invested in your
vision, innit

hence the term 'vulture capitalists' \-- how are VC's any different from tech
recruiters anyway?.

The only way to make any money is to sell something somebody else makes.

~~~
kortilla
> culture is the foundation of society and society is the foundation of
> civilization

That’s a terrible analogy because it’s trivial for the culture to change
without civilization being put at risk. Foundations can’t be substantially
changed without risking everything on top.

~~~
artsyca
What are you saying? the minute culture shifts so does civilization. Look at
where we are now compared to where we were in the industrial age.

This whole techbro culture has destroyed corporate society and brought about
drastic shifts in the entire world civilization and not for the better.

What is this wishful thinking?

Edit: and by the way the word 'culture' comes from the latin for 'core' it's
by definition the foundation. I can't believe we're arguing the semantics of
well-known words look up culture and society for yourself.

Edit 2: think of your culture like a potluck dinner. Everyone brings their
carefully prepared dishes. Some latecomer shows up to the door with a wad of
cash and says I didn't prepare anything but suddenly the money they brought
entitles them to be first in line. What kind of civilization can exist under
these cultural manners?

~~~
kortilla
A culture can be destroyed without taking out civilization though. It happens
all of the time. Comparing it to a foundation is absolutely terrible.

~~~
artsyca
I think I can understand what you're saying but you obviously can't understand
what I'm saying.

You're objecting to my use of the word foundation for some reason and all I'm
getting out of it is why even bother.

But here goes anyway as you may have heard words have multiple meanings and
not everyone uses them the same way.

I'm referring to the second meaning of foundation: an underlying basis or
principle.

Culture -> society -> civilization

These three things are built on each other.

When one changes all the others are affected without necessarily being
destroyed but yes if one is destroyed the others will suffer too.

You're also probably referring to an alternate definition of civilization as
in all of humanity whereas if you ask Siri the definition of civilization is
literally what I've written so like why all the hate bub?

"The society, culture and way of life in a particular area" i.e inside a
corporation.

Mess with the culture and it has outward ripples to the entire way of life duh

~~~
kortilla
I understand what you’re saying and I’m suggesting it’s a bad model.

You can’t have culture without a society and culture is heavily impacted by
civilization as well.

“Culture -> society -> civilization” is too rudimentary to be useful and it’s
just plain wrong in many cases. Changes in technology (e.g. smartphones) or
massive events (e.g. pandemics) flow backwards through the chain eventually
forcing the culture to change to adapt (social distancing, etiquette for
texting at the table, etc).

------
wayoutthere
Along these same lines, I've heard from clients that during the pandemic they
started to magically hit their diversity hiring numbers now that they judge
applicants on their performance rather than how much they "like" them.

Remote interviews have leveled the playing field and forced them to make more
objective decisions about who to hire. Suddenly there is no "pipeline
problem"...

~~~
CyberDildonics
Any company that has diversity hiring numbers that they are supposed to hit is
discriminating based on factors outside of performance if it influences their
hiring process at all.

~~~
ojnabieoot
The hypothetical you’re clearly referring to here is a high-performing white
or Asian applicant who regrettably has to be rejected to make room for a
mediocre black applicant. This concern is 1% based in reality and 99% based in
racist resentment.

Companies make hiring decisions based on all sorts of factors that have
nothing to do with performance. Two extremely problematic ones are:

1) soft “skills” like charisma, rapport, etc, which are much more about social
identity than social ability, and in particular discriminate against
nonwhites, women, and many LGBT people

2) Unvarnished and criminal Klan-style racism, such as turning down a well-
qualified job applicant because his name is Jamal, or assuming a black woman
must have lied about her 3.9 GPA, which is still rampant in all 50 United
States, and an enormous reason for the black-white wealth and income
disparity. This sort of blatant discrimination has been repeatedly observed in
the 21st century and is a plain fact.

These two practices are not only widespread and illegal, they also deprive
companies of good talent. The reason for diversity quotas isn’t to distort a
(nonexistent) meritocratic hiring process, but instead to correct grotesque
violations in actually existing hiring practices.

~~~
km3r
Do you have any sources to back this up? I figured that may have been the case
a few decades ago but I imagined nowadays the affirmative action outweighs
those factors on a macro scale.

~~~
ojnabieoot
I am sorry to keep being uncharitable about this but I am angry and
frustrated: the reason you “figured” it may have been the case a long time ago
but you “imagine” that nowadays we have the reverse problem is because you are
an ignorant racist who is filling your gaps in knowledge with white
resentment. I will try to alleviate some of the ignorant side of this:

March 2020, results from a field experiment demonstrating persistent
unambiguous racist discrimination:
[https://www.nber.org/papers/w26861](https://www.nber.org/papers/w26861)

This is a recent example of a famous series of experiments, where otherwise
identical fictitious resumes are given “black-sounding” or “white-sounding”
names (or addresses, alma maters, etc), and the researchers count how many
callbacks the resumes get. If the black resumes get significantly less
callbacks there is no alternative explanation than illegal racism. The classic
experiment is “Are Emily and Greg More Employable than Lakisha and Jamal?”
from 2003:
[https://www.nber.org/papers/w9873](https://www.nber.org/papers/w9873)

A 2016 retrospective of similar labor discrimination field experiments:
[https://www.nber.org/papers/w22022](https://www.nber.org/papers/w22022)

Evidence of improving but ongoing racist discrimination against black business
owners seeking credit:
[https://www.nber.org/papers/w13972](https://www.nber.org/papers/w13972)

2011 paper estimating that 1/3rd of the black-white wage gap is due solely to
employment discrimination:
[https://www.nber.org/papers/w17462](https://www.nber.org/papers/w17462) (it
has been established elsewhere that about ~1/2 the wage gap is due to the
education/credentials gap)

An interesting 2019 paper finding virtually no discrimination against Native
Americans and Hawaiians:
[https://www.nber.org/papers/w25849](https://www.nber.org/papers/w25849) (this
is relevant to the sociological view that American racial stratification is
anti-black more than pro-white, or rather that “white” really means “not
black”)

This is just from one google search of the NBER archives on my phone. This
evidence exists in spades.

~~~
ifokiedoke
Hey, I agree with everything that is being said here but I think it might be
unnecessary here to be making personal attacks such as calling somebody racist
or implying white resentment because somebody is mis-informed. Especially
because -- growing up in a racist society -- we _all_ have internalized racism
in some way, which we're just slowly trying to unlearn.

Just based on current events, even many dense non-Whites (myself included)
have just started to realize how deep the problem goes when it goes to both
conscious and unconscious bias.

We can definitely do better, and I hope the trends do indeed show that we're
heading that way.

~~~
ojnabieoot
In my view a huge part of the problem is that we keep giving bad people a
benefit of the doubt they don't deserve, and keep treating bad faith nonsense
as arguments worthy of consideration. In my view I am not making a "personal
attack" so much as calling a spade a spade.

To be clear: I believe OP is not just ignorant, but is being a bad person.
OP's point was not simply that anti-black discrimination is no big deal -
which would be reprehensible enough - but that _the opposite is happening,_ to
the detriment of whites. It doesn't matter if OP is parroting racist
propaganda or creating it themselves: it is highly potent racist propaganda,
designed to convert whites into overt racists by playing on their resentment.

OP isn't "less racist" if they sincerely believe the propaganda due to
misinformation: racism is racism and OP is perpetuating it. "Just because he's
repeating a racist lie does NOT mean he is a racist" is unfortunately a common
line of thought in the US. But this only assuages the feelings of whites, and
does not accurately describe racism in America.

~~~
CyberDildonics
When you say 'OP', who are you talking about?

~~~
ShrCul
> Any company that has diversity hiring numbers that they are supposed to hit
> is discriminating based on factors outside of performance if it influences
> their hiring process at all.

> OP's point was not simply that anti-black discrimination is no big deal -
> which would be reprehensible enough - but that the opposite is happening, to
> the detriment of whites.

You.

~~~
CyberDildonics
You do realize I didn't say any of that and this person hallucinated a giant
rant right?

