
Dear Dumb VC - jkopelman
https://medium.com/what-i-learned-building/e17153fde5f1
======
graycat
It's easy to sympathize with the OP.

It would be better to quote some actual data on VC returns, So, recently we
have seen:

(1) As in Fred Wilson's post of

    
    
         Feb 21, 2013
    
         Venture Capital Returns
    

at his

    
    
         http://www.avc.com/a_vc/2013/02/venture-capital-returns.html
    

over the past 10 years, early stage US venture capital on average has had
return on investment (ROI) less than the S&P 500.

(2) As in remarks on venture capital at the Web site of Peter Theil's The
Founders Fund, at

    
    
         http://www.foundersfund.com/the-future
    

where click on "Read More" in a tiny image near the bottom of the page, with

    
    
         'Founders Fund:'
    
         'What Happened to the Future?'
    
         By Bruce Gibney
    

in section "VC's Long Nightmare", see:

"Along the way, VC has ceased to be the funder of the future, and instead has
become a funder of features, widgets, irrelevances. In large part, it also
ceased making money, as the bottom half of venture produced flat to negative
return for the past decade."

Wow! Negative return for a decade!

It would be good for the VCs to 'up their game'.

~~~
tlogan
I think VCs behave in the same way as _majority_ of investors: buy high and
sell low. Also, there is also herd mentality - majority of VCs and
entrepreneurs try to work on similar things.

However, I would like to point out that VCs are very important. Without them
there will be no SV as we know (I do see how VC landscape is getting disrupted
by YCombinator, Start Fund and similar).

And - it is not nice to call people dumb if they are not dumb (at least I wish
I'm dumb as the dumbest VC I met).

~~~
hga
And the herd mentality is not new, in the '80s there was overinvestment in PCs
and disk drives. If my memory is not failing me, at one point there were
around 40 (sic) mostly? entirely? VC funded disk drive companies (not that
most actually got a product to market). It was a really crazy time, some/many
of them shipped a lot of drives that they knew didn't work, and MiniScribe, a
fairly well established one that had been cooking the books for a few years
after losing an IBM contract, ended by "shipping bricks" (!!!;
<http://en.wikipedia.org/wiki/MiniScribe>):

" _The primary scandal erupted in the final weeks of 1989, when after failing
to procure short-term financing, the company executives decided to embark upon
a fraudulent course of action to bring in the financing unwittingly from their
customers. As each unit sold was tracked via serial numbers and also sat
uninspected for some weeks inside warehouses in Singapore awaiting use in
production, the decision was made to ship pieces of masonry inside the boxes
that would normally contain hard drives. After receiving payment, MiniScribe
then planned to issue a recall of all the affected serial numbers and then
ship actual hard drive units as replacements, using the money received to meet
financial obligations in the short term.

However, MiniScribe embarked upon a round of layoffs just before their
Christmas shutdown, including several of the employees that were involved in
the packaging and shipping of the masonry. These people immediately called the
Denver area newspapers...._"

------
mkoble11
_The VC was seventy-five minutes late to the meeting. She refused to see him
even though he was in the office and her calendar was clear. Later that week
she raised money from someone else. He kept emailing her saying his partners
were going to kill him, please take the meeting with me.She never took the
meeting, and she never called him back._

Good for her. If he's 75 minutes late the _very first meeting_ , that signals
you're not a priority and could suffer in the future when you most need it.

I don't care how "big" you are....if you want people to respect you, respect
their time.

~~~
bayesianhorse
Probably depends on the reason for the delay. If he delivered his child to the
hospital for example, I wouldn't want to be his priority.

~~~
nsmartt
I thought this too, but the article makes no indication that he ever attempted
to explain. He could have called/emailed and explained in advance, and asked
to reschedule—even for the same day—, or he could have explained in one of the
emails he sent afterwards.

Of course, this information could just be omitted from the article.

------
mayank
Good points, but what a sad level of discourse. "Dumb VC"? If you don't like
the VC, or find them unprofessional, there's no reason to lose your own
professionalism, certainly not to write "dear dumb VC" articles on Medium.

~~~
droopyEyelids
Paul Graham's Hierarchy of Disagreement

[http://www.acceleratingfuture.com/michael/blog/images/disagr...](http://www.acceleratingfuture.com/michael/blog/images/disagreement-
hierarchy.jpg)

~~~
mayank
I explicitly said I wasn't disagreeing with his point, just pointing out the
lack of courtesy that I find endemic in rantings that are posted here. Your
posting of the "hierarchy of disagreement", on the other hand, looks like
classic middlebrow dismissal.

~~~
rhizome
On yet another hand, courtesy and manners are social inventions of
_aristocracy_ that constitute a tone argument, which is pretty low on the PG
hierarchy and at any rate is an argument that benefits only the (in this case)
VCs.

------
ig1
The author makes the mistake of taking a single data point (a throwaway
comment at that) and generalising from it.

If you've got a board member or advisor (be it from a VC or elsewhere) with
strong experience, then it's crazy not to talk to them about the problems
you're having.

It's not just about product strategy, it's about building a company. If you've
never had to scale a sales organization, if you've never had to open offices
in foreign countries, etc. then it makes a huge amount of sense to speak to
someone who's not only done it but has sat on half a dozen boards of companies
who've had to go through the same set of problems you'll face.

What you should however take away from the article that it's important to do
due diligence on your investors. You want an investor whose advice you'd want
even if they weren't invested in you (this applies both to the VC firm and to
the VC partner you'll be dealing with).

Why would anyone chose a top-tier VC over another VC - it's not because they
offer the best terms of investments. It's because their value-add in terms of
expertise, etc. is higher than everyone-else.

There's no point in going after a top-tier VC if all you want is money.

------
saosebastiao
After working as an analyst for one of these Dumb VCs, this is the first piece
I have written that summarizes everything I feel about them adequately.
Especially the last snarky remark about the 94% of VCs that read the article.

I genuinely feel like there is an incredible market out there that is waiting
to be tapped: No Bullshit VC's. Give entrepreneurs a commitment: Once you get
to the stage where they want to meet with you, they meet with you once, have
an agreed upon time period for research, and at the end of the time period,
they give you a term sheet or a refusal. Extra points if they give straight-
forward valuations without the salesmanship bullshit of trying to quantify
intangibles like the value of their advice or connections. And extra extra
points if they avoid meddling.

~~~
hga
One thing I noticed about some of the major successes in the good old days
(the '80s for me) is that they had a "No Bullshit" early investment, one where
a VC took a good look at the company and without wasting time signed a check.
Sun I think enjoyed one of these....

------
jacquesm
More medium.com linkbait. You can't generalize like this. I've seen VC's
rescue companies that were on the skids and I've seen VC's invest in companies
being more than happy to be hands off. I've also seen them contribute to new
management after the original CEO met with some really bad luck right after
the investment.

All VC's (unlike whiny articles on medium.com) are not created equal. If
you're going to go out and write a piece like this anyway you might as well go
all the way and name the party, as it is it's an unverifiable one-sided ploy
for attention.

------
smoyer
We were the first company to transmit cable television signals over fiber
optic cable, but during a board meeting, our VC's representative heard we were
using lasers, and wondered if we could expand the business by selling tattoo
removal equipment. There are instances where a VC should give you money
(assuming you're a good bet), and yet NOT get a board seat (or as the article
says ... a returned telephone call).

------
joonix
I don't understand. They want a VC who is "hands off," yet at the same time
they want a VC who "cares about the product," citing the example of a VC
showing up wearing their company's pants. Why does a VC need to care about
your product if you want them to just fork over cash and remain hands-off?

------
lobo_tuerto
Why are sites like this still hijacking the back button on users browsers?

(Go to the link, then click back, and again to see what I mean).

~~~
gwillen
Works when I do it, in Chrome. If it's failing in Firefox, my guess is it's an
issue related to the JS history API, which differs slightly between the two
(and is generally a giant pain in the ass to use correctly.)

------
burgreblast
Being angry doesn't help you make good decisions. This post highlights the
author is pretty junior in his thinking.

Even if he has a good business.

------
3327
very well put together - great piece. As op expects, there will be flack as
'dear dump startup' etc but we all know that as its the norm and VC's have an
aura as if being on the other side of the fence they are playing a different
ball game. Nope !

------
thebigsteve
Pure Genius

