A VC« Electricity | Main | What Makes A Great VC? »
Telling The Truth
On the flight out to LA, I sat next to a woman who was very talkative. She was single and was doing a fair amount of online dating. She asked me for some advice about how to call it off with one of her dates. She wanted to tell him she was seeing someone seriously, which wasn’t true. She felt that would end it the easiest. I suggested to her that maybe she just ought to tell the guy the truth, whatever it might be. She wasn’t sure about that approach.
Why do I mention this? Because it inspired me to think about the way turn-downs work in my business. We raise money and we invest money. In the first activity, we are the ones who get turned down. In the latter, we are the ones who do the turning down.
I have to do turn downs all the time, sometimes as much as one a day. Telling anyone that you don’t want to do what they want you to do isn’t easy. When I was younger, just like the woman on the plane, I tended to say whatever got me off the phone the quickest. But I soon realized how counter productive that was.
Entrepreneurs have long memories and while they never appreciate being turned down, they also appreciate the VC that actually takes the time to spell out exactly what the issues that caused the turn down. I believe that you must think about every action you do in the context of a long career. If you take that approach, then taking the time to give constructive feedback nicely and engaging in a dialog instead of just delivering a message is the best approach.
I remember one particularly painful turndown from about eight years ago. We had looked very hard at a company in the Internet market and liked the plan and the opportunity but we got consistent feedback that the CEO was going to be very difficult to work with. We decided to pass on the opportunity. When the CEO called me, I said that we had decided to pass. The next question, of course, was why? I said that we had a number of concerns about the opportunity that we just couldn’t get over. A nice but totally uninformative statement. That wouldn’t work for the CEO. So, after beating about the bush for about five minutes, I decided to tell the truth. I said that we felt it was going to be difficult working with her. That didn’t go down very well. But it was the truth.
Comments (4) | | TrackBack (3)
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d83451b2c969e200e5503672638834
Listed below are links to weblogs that reference Telling The Truth:
» To Tell The Truth from Feld Thoughts
Fred Wilson and I are cross posting each other today (we must miss each other) - he had a good post this morning on how turn downs work in venture capital and then followed it with a followup post about what makes a great VC. Fred's post on telling the... [Read More]
Tracked on Jun 16, 2004 11:13:15 AM
» ...Will Set You Free from Coty's Radio Weblog
Fred Wilson blogs at A VC about the virtues of telling the truth even when a white lie seems like it might be easier and nicer. [Read More]
Tracked on Jun 17, 2004 4:58:44 PM
» getting to no from Seen Not Heard
Someone new to the team had to give their first [Read More]
Tracked on Jun 9, 2005 12:23:46 AM
Posted June 16, 2004 in Venture Capital and TechnologyComments
Regardless of how good or bad the business relationship is, it's easy to get somebody to tell you what you're doing right, and hard as hell to get them to tell you what you're doing wrong. And the latter is invariably better information.
People genetically dislike conflict and confrontation, and will go to extraordinary lengths to avoid it.
Another good post, Fred ;-)
Posted by: hugh macleod | Jun 16, 2004 1:21:56 PM
WHAT PART OF “no” DO WE NOT UNDERSTAND?
Actually, that's a great parallel! I always find it hard to break up with women (not that I did it all so often - I was definitely abandoned more then I ditched) - but you are right, there are great similarities.
As an entrepreneur, I wonder what form of NO from a would-be investor would make me feel bad and what would make me feel good. (As humans, we can't help being concerned about those things.)
Some time ago, my girl-friend broke up with me and it was the sweetest (although least expected) break-up ever. She just said: I think this is too intense, we are too crazy in love, and we should call it off. [I know, no logic in this - and she was probably just making me feel good.] I pretended it was all the same to me - and the nicest thing was that at the end I heard her sob and blurt her last: "I love you." – Wow... I “liked” (not really) that kind of break-up.
Very recently, one of our would-be angel investors expressed interest in an investment and asked for a proposal – when we sent it to him, he promptly (within a couple of hours) replied that he would pass on it since the size and structure were not to his liking. Whether he had other motifs, I don’t know – but the way he did it was really professional and really straightforward. My colleagues and I were not so excited about the NO, but deeply appreciative about the style of it. Besides, he never said he didn’t like the product/company/business – in a word, us.
Two stories about “break-ups” with slightly different break-up reasons – both were pretty easy on me since they had one thing in common: we all love to be loved and would accept any break-up reasons – for as long as the “I don’t love you” is not part of it... :)
Posted by: Iggy | Jun 16, 2004 8:41:56 PM
I remember when you turned her down. She was not happy. You happened to be right on the mark as 8 years have passed and the business is worthless. I believe that the truth is the best. Hopefully, both parties will learn something in the long run.
Posted by: gotham gal | Jun 17, 2004 1:10:30 PM
Hi Fred,
I love your blog and read it as soon as you update it. I also love Gotham Gal's restaurant reviews etc.
Do you have a link to the girl's dating site profile? :)
Best,
Mike
Posted by: mike | Jun 17, 2004 4:41:41 PM
Main RSS Feed of All Posts
VC and Technology Posts Only
