Recent events reminded me of an interview David Kirkpatrick did last year with Jim Breyer and Sean Parker and initially prompted me to write the following status update on my FB timeline:
"JAN SIMMONDS - ...has learnt over many years that it takes a rare and brave talent to spot and nurture real talent and most feed in their wake. If you want to do big things you need to be in the boat... The trick is not getting weighed down by those trying to hitch a free ride..."
Now Jim and Sean are two people anyone would confirm are truly 'in the boat' and whom I greatly admire, but their views in this instance are in my opinion slightly misguided. I initially perceived them as arrogant, but now find myself thinking that actually they simply weren't putting their finger on the real problem. You see I don't think there is any real issue with glut of funding; after all any money finding its way to drive innovation is a good thing. Not just in SV but all over. But too much of it is in the hands of people who haven't a clue what they are doing. In my boat analogy, the bottom feeders are muddying the waters so badly you can't see the good stuff anymore. I'm watching good people blow millions on people who so aren't entrepreneurs on the one hand and on the other I see a corporate environment so stuffed to the rafters with professional ass lickers it's almost scary the billions lost in shuffling the blame for the lack of innovation backwards and forwards. I simply marvel at some people's ability to make a whole career out of achieving absolutely nothing whilst being paid more per month than most of the people who actually do provide some function, earn in a year. I wish I had the lack of self respect to be one of them but I just can't seem to make myself sufficiently bland.
But to me this whole subject is totally about entrepreneurs and how they need to be able to differentiate between those who are there to lift them up and those whose whole existence is geared to holding them down. (Ass lickers hate entrepreneurs because they make them look inadequate, so when they stumble across one they tend to keep them out of harm's way. Only successful entrepreneurs and M&A guys like and understand good entrepreneurs!)
In both Sean and Jim's case their early involvement in Facebook is already the stuff of legends, but both are still foraging into new worlds and still seemingly get off, not on the money, but on the 'explorer' in them which prefers uncharted territory. Jim has his sights set on Korea and China and Sean is looking at the next legacy business to disrupt. But I'm not here to blow sunshine up their asses, rather to request they correct their assertions in the hope they can leave a cleaner wake in their path next time. Don't focus on the funding; the more money for entrepreneurs the better. Instead gun for the idiots who squander it on copycat businesses or ex bankers who think they're suddenly entrepreneurs. Get rid of the bottom feeders and the ass lickers en masse. Clear the path to the money straight to the entrepreneurs and in the care of those who know how to utilise it. But don't stop the flow of cash...
In my music biz days, (I was a Manager who clawed my way up from the back of a van to representing even some all time great acts), there would always be a handful of A&R guys and girls who took the risks and defined the trends. For every one of them were ten who simply kept their jobs in big labels by making sure they were seen at the gigs those guys were at and trying to sign the acts they knew the former wanted. The net result was that those acts they did sign never stood a chance because their A&R reps were bottom feeders not boat drivers. For the artists and Managers like me, before we got in the boat, it was very easy to see the A&R guys at one of the big labels as the holy grail. We'd spend thousands we didn't have pandering to requests for new demos, different drummers and pretend we weren't borderline destitute. We'd sell the promise on to patient frends and family who bailed us out again and again. Everyone would live off the imminent recording contract for a while and in some cases it came. But most often we were dealing with very well paid employees who had created an art form of surfing in the wake of those who had gone before them. They weren't the guys who'd signed the Spice Girls or acts like the Rolling Stones et al before them. No these were the bottom feeders whose skill was not in spotting the talent of the future, but in keeping their jobs. Sometimes they would sign an act that had value, by sniffing in the shadows of the innovators and grabbing opportunities from under their nose. And I had my share of those too. But we weren't really in the boat, because that was typically driven by someone way up the food chain. Most importantly, we kidded ourselves we were afloat but were simply now, firmly at the mercy of somebody whose main ambition was to keep their job.
It isn't lost on me by the way, that the above describes most corporate life, at least to those with ambition constantly thwarted by jobsworths whose very existence blocks your light from shining; and by all means read this as a metaphor for that and forgive me from making it industry specific. Likewise, I should be clear I have deep admiration for people who work in any companies, including mine, whose role is to keep the boat running and whose expectations are driven simply by wanting to do that to the best of their ability. This piece just isn't about you, but reading it may help you do that even better, if only in recognising that your job security will always be better in one of the boats and not with the bottom feeders.
So having spend the past ten years repeating the same mistakes in the media and technology worlds (The Adjustment Bureau seems to see this as a necessary process for me!) I have come to some conclusions that I hope entrepreneurs will resonate with and benefit from. Likewise, I hope that next time Sean Parker, Jim Breyer and a host of similar 'explorers' are interviewed on this matter, they may take these observations under consideration and rather than mistakenly giving the impression they are greedy and looking to narrow the competition, they may say what needed saying instead and fire all the people who are just feeding their egos and giving false hope to entrepreneurs. Three strikes and send them packing perhaps? Just lose the bullshitters and jobsworths giving the industry a bad name.
For me, perhaps my own epiphany is to call time on all the pseudo investor pricks, wannabe Steve Jobs (who just so never will be) and guardian angels looking for a free ride who have got in my way over the years and slap myself across the face for not learning fast enough to walk on by when they've appeared. Similarly, if it were only me they've caused misery and distress that's one thing, but as most true entrepreneurs will know, there are a bunch of people you do want in your own boats. That crew of family, friends and employees who supported you without expectation because they love or respect you and whose reward is simply seeing you shine at your brightest. Well these bastards are screwing them too and that just isn't right.
My tips for getting in the boat based on my experience:
Angels
Beware false angels! If there is a glut of anything, it is the pseudo Angel Investors and Venture Catalysts. They come in all manner of disguises and the vast majority are nothing of the sort. Rather they are professional hitchhikers unable to innovate themselves, who lurk in the shadows of the start up world and keep as many of the glimmers (that's you btw, before you get your wings) as close at hand as possible, usually by saying they can bridge both worlds. If they aren't giving you cash immediately, then stop kidding yourself and dump them as fast as possible. I know it is very easy to be enticed by promises of money (more than a few weeks is a lie), impressed by apparent connections that are loose at best and I've wasted literally years and tens of thousands buying into such people's bullshit.
A proper Angel Investor has a pedigree, has done it countless times before and knows you have value in about thirty seconds of meeting you. A proper Angel will hand over money immediately after his gut has given him or her the right tingle. In some cases a so called Venture Catalyst can make that difference. You only have to look at Sean Parker and Zuck to confirm that. But do they really have the access and the contacts? (The mysteriously reliable 80:20 rule would strongly suggest they don't.) Don't waste a second on them without qualifying it first and ask yourself this: 'Are they commited to me 100%?'; 'have they done this before?'; 'are they actually paying my bills?' and 'can someone in the boat vouch for them?'. Remember, you are the entrepreneur on their knees. Always borrowed up to the hilt and on the verge of falling into the abyss.
A genuine angel will give you wings and change your life. (Most of them have known that pain and want the joy of watching you too take your first real flight. That's the perk of their success; helping others like them soar and become fellow angels.) Everyone else is a waste of your time and if we didn't keep feeding them, they'd shrivel away back under a rock.
Sure you may be one wannabe angel's first success, but then for that privilege they should be paying you more. If you find yourself following their lead and/ or they haven't parted with cash, you are suffering from illusions. They have clipped your wings and are keeping you in their shadow so you can't get to the opportunities direct or without carrying them with you. (And I stress CARRYING) They are not Angels, they are a disease, they are the cancerous ones, who kill the vast majority of entrepreneurs (and talent across the corporate world, perhaps even our whole economy...). Useless in their own value, they are the slave traders of todays age. If you haven't seen their money (tangible benefit, kindness or generosity or all of the above) within a few days of that first contact. Move on! If a real Angel doesn't show, keep looking and iterating until they do. These are the bottom feeders I wish Sean and Jim had berated... and for the reasons described.
Your First Round
So you are up and running but need more cash! To borrow and bend a famous line from Winston Churchill, 'ask not what you can do for your VC, but what your VC can do for you'. That is to say, if you're finding yourself doing all the running, what you have isn't good enough and you may be knocking on a bottom feeder's door. If your vision is of value, then you are the one in demand not them. If you aren't in a position to be asking what they can do for you and judging on their ability to deliver, then they are the one in demand and you are at risk of ending up trapped in the wake. Maybe you are dealing with the next shining star in that organisation... (they of course exist too!) Reassure yourself by asking for their investment to be endorsed by an explorer. Then you know you aren't buried under the radar.
Most importantly, if your business isn't charting new ground and your investment is from a firm who just wants to be in well trodden space, then don't kid yourself you are an entrepreneur. You're at best just a pretender to being one pending acquisition by someone in the boat. So learn how to be a great employee and save yourself the heartache.
Who to trust!
In my experience, I would say that everyone is a blood sucking bastard until proven otherwise. VC's won't sign NDA's and actually that makes sense. But sending out your business plan to Angels, Businesses and VC's en masse without significant traction in iteration is plain stupid. (Yes I've done that one too.) I have a long list of well known industry people and businesses I've sent my plans to way too early. (In cases five years too early) And all I've actually done is educate some asshole who was able to draw on his subconscious to compliment an investment years later. (In some cases that's way too generous and in others the jury is out on whether they'll ever acknowledge my contributions!) That's the problem with entrepreneurs you see; your great idea will turn up sooner or later. You may even have spawned it. Don't send out business plans until you are ready and never unsolicited.
In the old days I used to get over 1000 demos a week in my office from wannabe musicians. I never ever signed one of them. If we started hearing a buzz on an act, we'd catalogue those demos and they'd get on the shelf. But the acts I signed I invariably found myself, mostly because they represented what I believed in. They rarely were the ones who came looking for me. Great VC's are the same in my opinion and you are far less likely to get shafted if they've approached you for the plan. If they haven't asked for it, then don't send it. EVER! Don't trust a VC unless they've come looking for you and made it absolutely clear why they are interested in you. The explorers actually in the boat may have some buffers around them and in some cases some bottom feeders who are getting away with it, but they clearly value both theirs and the firms' reputation. If you have their ear, they'll be able to absolutely explain why they want to invest in you and will probably have been watching you for some time, often longer than you think. Finally if they are the only VC interested then you need to know if they are so far ahead of the bottom feeders you are in great hands or your business is just a pawn in a wider strategy. Probably only you and your gut can answer that one. But certainly contemplate it before signing.
So that's my humble opinion. I'm not arrogant, but I'm usually right and have a host of examples to substantiate all the above. From catalysing or directly contributing to the core drivers of some of the most significant investments of the moment (You know who you are!), these are the lessons I've learnt. But like you, I'm still an entrepreneur walking along the edge of the abyss and hoping for an angel to give me a fucking big pair of wings. I've ignored all the advice above until now, so if in the near future, you see me flying by or I am indeed one day your angel; I promise not to steal from you, put you in a box or waste your precious time. No I shall just revel in watching you soar, because I'm one of the few who know how much you've been hurting along the way.
To those who've wasted my time and money, stolen my ideas and caused me heartache; I'd like to thank you for the valuable lessons and to offer my condolences for never having been blessed with originality. It must feel awful being slightly inadequate, perpetually average and I just don't know how you sleep at nights.
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